Sumner Redstone and family settle legal dispute with his ex-companion Manuela Herzer

Closing a chapter on a long-running saga that laid bare the inner workings of Sumner Redstone’s corporate empire, the ailing 95-year-old media mogul and his family have reached a settlement to end their lengthy legal dispute with his former live-in companion Manuela Herzer.

As part of the agreement, Herzer agreed to pay the Redstone family $3.25 million to reimburse Redstone for some of the gifts that she had received from him. Herzer also agreed not to sue the family again.

The comprehensive settlement, reached Friday, aims to resolve seven separate legal claims filed by Herzer and the Redstone family during the last two years. A judge must approve the settlement.

“The Redstone parties shall not have any monetary obligations or be required to make any payments of any kind to ... Herzer” or her children, according to the 17-page proposed settlement.

Settlement talks accelerated in recent weeks in advance of a trial that was slated to begin next week, and Herzer “saw the handwriting on the wall,” according to a person involved in the settlement who asked not to be identified. The concessions represent a reversal of fortune for Herzer, who two years ago was offered $30 million by the Redstone family to end the legal wranglings and quietly exit their lives.

A former girlfriend who remained in Redstone’s orbit years after their romance ended, Herzer was abruptly kicked out of Redstone’s Beverly Park mansion in October 2015 and promptly written out of his will. She was the second of two female companions to be bounced from the house that year.

In an attempt to restore her standing in Redstone’s estate plan and as his primary caregiver, Herzer filed a lawsuit in November 2015 — a case that ultimately exposed Redstone’s failing health, questions about his mental capacity and other salacious secrets: female escorts called to his mansion to entertain him, stock sales to generate millions of dollars that he lavished on girlfriends, and how the once mighty executive was prone to crying spells.

The case also pulled back the curtain on a vacuum of power at the top of the corporate empire, which includes Viacom Inc. and CBS Corp., and allowed Redstone’s daughter, Shari Redstone, to assert her authority and become a major force in his life following years of frosty relations.

After Herzer was pushed out, Shari Redstone took charge of her father’s care — as well as the family business. Herzer tried to take on Shari Redstone, alleging that the billionaire’s daughter had made an inappropriate power grab by enlisting Redstone’s nurses to spy on others in the Beverly Park mansion and dig up dirt. Emails, which became part of the legal proceedings, showed lingering tensions between Sumner and Shari Redstone before his health deteriorated — raising questions about how Shari Redstone came to power.

The legal fights with Herzer prompted a series of dominoes to fall at the two companies: Herzer’s demands that independent doctors examine Redstone forced the one-time titan to relinquish his role as executive chairman of the two companies. The revelations of Redstone’s declining health exposed the companies to shareholder suits and prompted boardroom bickering at Viacom.

In August 2016, Shari Redstone prevailed in forcing out Viacom’s longtime Chief Executive Philippe Dauman and several board allies. That move allowed Shari Redstone to usher in a new era of management at Viacom, which owns cable channels MTV, Comedy Central, BET, Nickelodeon and Paramount Pictures.

At CBS, the once-popular Chief Executive Leslie Moonves bristled over Shari Redstone’s control and desire to reunite CBS and Viacom. In May, CBS filed a lawsuit to strip the Redstones of their voting control of the company, but that effort collapsed in September when Moonves became mired in a sexual harassment scandal that ultimately cost him his job and a $120-million severance package.

Redstone, whose health has been deteriorating for the last several years, is rarely seen in public. Instead, a battalion of nurses and caregivers tends to his needs. Last month, Sumner Redstone’s attorneys conceded that he had become incapacitated, and he was placed under court-appointed guardianship. It was an embarrassing coda for a man who long prided himself on his intelligence and cunning.

As Redstone’s health declined, so did the fortunes of Viacom. Many on Wall Street still expect that Viacom and CBS eventually will reunite, perhaps later this year.

In October 2016, Redstone sued Herzer and his other former girlfriend, Sydney Holland, claiming elder abuse. An attorney for Redstone, Robert Klieger, alleged in court filings that Herzer and Holland schemed to isolate Redstone from his family as they drained his financial accounts.

Redstone, in the court papers, acknowledged that he provided gifts to the two women totaling more than $150 million during a five-year spree. Such largess left the elderly mogul “in debt” due to tax obligations triggered by those “gifts,” according to that lawsuit filed in Los Angeles County Superior Court.

“They had bags of cash delivered to Beverly Park almost daily, typically bundled in stacks of hundred-dollar bills,” the suit stated. “They had carte blanche with Redstone’s credit cards, regularly charging thousands of dollars per day.”

Holland allegedly racked up more than $2 million on Redstone’s credit cards in 2014, including a $58,461 charge at Saks Fifth Avenue and a $752,737 bill at Tracie Butler Interior Design, according to the court papers. That same year, Herzer’s charges totaled $1.5 million, including $128,780 at Barneys and $82,624 at Hermes, the court records said.

Representatives of the women said Redstone provided the gifts of his own free will.

Herzer’s attorney, Ronald Richards, did not respond to requests for comment on Tuesday. Holland, who reached a settlement last year with the family, resolving Redstone’s claims against her, also did not respond to requests for comment.

Forbes estimates Redstone’s wealth at $4.5 billion.

He remains the controlling shareholder of CBS and Viacom, as well as chairman of National Amusements Inc., the Redstone family investment vehicle with controlling stakes in both companies.

Herzer lost her initial attempt to restore her standing in the Redstone household in May 2016, but she continued to file court cases. One was a federal racketeering lawsuit against Shari Redstone and her family members. Herzer dropped that action, and as part of the proposed settlement, she agreed to abandon all such claims. She also surrendered her claim to Redstone’s multimillion-dollar apartment in New York at the prestigious Carlyle Hotel.

Herzer’s legal team challenged Redstone’s petitions, contending that the mogul long ago lost his mental competence and that lawyers who surround him don’t really know what his wishes are. Her team tried for more than three years to get a judge to declare Redstone mentally incompetent; they did not succeed.

Last spring, Sumner Redstone filed his own petition to preserve changes made in May 2016 that removed Herzer from his personal trust. That change marked the 40th amendment to Redstone’s trust, which maps out his wishes about how his property should be divided after his death.

Redstone’s attorneys still plan to ask a judge to uphold the validity of that amendment.

The Wall Street Journal first reported on the settlement.

Los Angeles Times staff writer Lauren Raab contributed to this report.

meg.james@latimes.com

Twitter: @MegJamesLAT