Redstone family rift may not be healed
Since the public blow-up in July between Sumner Redstone and his daughter Shari over corporate governance and succession issues at their family-controlled entertainment empire, the 84-year-old chairman of Viacom Inc. and CBS Corp. has been on a campaign to convince the world that the feud has blown over.
In August, he orchestrated a family dinner in New York that was described by the New York Post as a rapprochement.
Last month, he was quoted in the Boston Herald praising his daughter, who runs the family’s theater chain, National Amusements Inc., from a suburb outside Boston.
And late last week, Redstone told The Times through a spokesman: “We love each other; there’s no rift.”
But according to several people close to the two, relations between father and daughter are anything but lovey-dovey, and their conflict appears very much alive.
“Shari still intends to try to resolve the differences with her father privately,” said her spokeswoman, Nancy Sterling.
The nasty dispute might not be resolved any time soon, though, leaving succession at the $50-billion media conglomerate an open question.
All substantive talks between the two camps have come to a grinding halt, according to people close to father and daughter who asked not to be named because the negotiations are private. The media chief is in no hurry to make a move, said a person close to him, adding that Sumner is content to have issues of succession decided after his death.
The media mogul appears to have all the leverage. Although he could buy out his daughter’s 20% stakes in CBS and Viacom, there is nothing compelling him to do so since he controls both companies.
Such a purchase probably would require him to sell his own shares, something he has long been loath to do. That would put unwanted pressure on the stock prices of the two companies.
In addition, he has the right to remove his daughter from the board of directors and fire her as vice chairwoman if he wanted.
After the conflict erupted in the press this summer, the two Redstones publicly divulged that they were considering severing their business ties. Under one scenario discussed by their lawyers, Shari would give up her board seats and sell her voting stakes in exchange for full ownership of National Amusements.
In mid-July Sumner inflamed the tensions in an open letter to Forbes.com, disparaging Shari as having made “little or no contribution” to the media dynasty he built, which includes Viacom’s Paramount Pictures, MTV and Nickelodeon, and CBS’ broadcast network, radio stations and the Showtime premium cable channel.
Shari was so livid that she considered legal action against her father.
But in August the Redstones privately agreed to a cooling-off period until after the Labor Day weekend, when Shari’s 25-year-old daughter, Kimberlee, was to be married.
Sumner and his wife, Paula, attended the Sept. 2 ceremony at the Inter-Continental Boston Hotel, where heart-shaped fireworks lit up the Boston Harbor.
One guest said that although there were no fireworks between Sumner and Shari during the lavish event, the pair weren’t exactly cozy.
“There was peace, but they basically didn’t speak to each other all weekend,” said one person, who asked to remain anonymous because the wedding was a private family affair. The person said the elder Redstone laid low, neither toasting the bride and groom nor playing any other ceremonial role.
A person close to Sumner said he and Shari “hugged each other.”
Many industry watchers expected settlement talks to resume shortly after the wedding, but nothing has happened.
What set off the clash to begin with is something of a mystery. In 2004, Shari was named vice chairwoman of Viacom and the following year was given the same title at CBS after her father cleaved the companies into two publicly traded entities.
A few years ago he altered the family trust to suggest that Shari would assume his titles as chair of National Amusements, Viacom and CBS upon his death.
In his July letter to Forbes, however, he dropped a bombshell: “While my daughter talks of good governance, she apparently ignores the cardinal rule of good governance that the boards of two public companies, Viacom and CBS, should select my successor.”
He had voted to reelect Shari as a director of CBS and Viacom at board meetings on May 23 and May 30, respectively. The directors also had reelected Shari as vice chairwoman.
The root of the Redstones’ feud, according to people close to the company, was Shari’s efforts to increase the number of independent directors and outside oversight on the Viacom and CBS boards. Her insistence on instituting performance-driven compensation also is said to have set her father off.
If Shari and Sumner ultimately sever their ties, she would join a long list of Redstones who have left the family business after feuding with the iron-willed patriarch. Sumner recently settled a lawsuit brought against him by his son Brent; another, filed by nephew Michael D. Redstone, was dismissed in July. Years ago, his brother Edward S. Redstone also left Viacom after a legal tangle with his sibling.
Sumner’s grandchildren probably would inherit the family business, if it wasn’t put into play and sold.
That all depends upon how father and daughter play out their hands.
Times staff writer Thomas S. Mulligan contributed to this report.