Just a few years ago, Shari Redstone was on the outs of her family’s far-flung media empire. Her father, Sumner Redstone, once dismissed her publicly as a lightweight who contributed little to the business. Instead, he surrounded himself with younger girlfriends and business cronies.
Tensions were so high that he offered her a $1-billion buyout, and she fumed to her son in 2015: “Your grandfather says I will be chair over his dead body.”
But on Tuesday the boards of CBS and Viacom agreed to reunite the two Redstone-controlled companies that were torn apart 13 years ago. And they announced that Shari Redstone would become chairwoman of the new entity, ViacomCBS Inc., joining a small number of women overseeing a major U.S. company.
Under the nearly $12-billion deal, CBS will absorb the smaller Viacom, which owns such brands as MTV, Nickelodeon, Comedy Central and Paramount Pictures.
The merger agreement is a triumph for Redstone, who has overseen the family’s controlling stakes in the two companies since her father’s declining health forced him to relinquish control. She pushed for the union, believing the two companies would be stronger together during a turbulent time. The entertainment industry is facing intense pressure from technology behemoths Walt Disney Co., Netflix Inc., Amazon.com Inc. and Google, which introduced popular alternatives to traditional television. The changing economics have created a sense of urgency among major Hollywood studios to fortify themselves by bulking up.
“I am really excited to see these two great companies come together so that they can realize the incredible power of their combined assets,” Redstone said in a statement Tuesday. “We will establish a world-class, multi-platform media organization that is well-positioned for growth in a rapidly transforming industry.”
In the last three years, she has proved herself as a worthy successor to her 96-year-old father, known for his stubborn streak and ability to outlast opponents. Since reentering her father’s life in late 2015, Redstone has vanquished more than a dozen men whom her father put in power. She halted a plan to sell the storied Melrose Avenue movie studio, Paramount Pictures, and now she has corrected what she long considered a mistake — her father’s separation of CBS and Viacom in 2006.
“Shari has definitely proven herself as an effective strategist, someone who is willing to go to whatever lengths she needs to get something done,” said Jordan Matthews, an entertainment attorney with Weinberg Gonser in Los Angeles. “People underestimated her, but she’s proven that she’s obtained a lot of her father’s characteristics.”
The deal is subject to regulatory approvals, but the new company is already taking shape. Redstone’s handpicked lieutenant, Bob Bakish, will oversee the new ViacomCBS as chief executive. Their strong working relationship ensures that Redstone no longer will be the subject of boardroom resistance. Instead, she will be integrally involved in steering the ship as it tries to compete with much larger media and technology companies.
Redstone, as board chair, joins an elite group of women. Only 7% of the largest U.S. companies in Standard & Poor’s top index have a woman as a board chair, according to Fenwick & West, a Mountain View, Calif., law firm. In an additional 14% of those S&P 100 firms, a woman was lead director — another key board post.
“Less than a quarter of the S&P 100 companies have a woman as their chair or a lead director, and that puts Shari in a notable position,” said Dawn Belt, a partner and coauthor of Fenwick & West’s Gender Diversity Study. “It’s awesome. We need more women in leadership positions.”
The Redstone family investment firm, National Amusements Inc., controls nearly 80% of CBS’ and Viacom’s voting shares. Over the years, Shari Redstone would tell her tough-as-nails father that she possessed 80% of his brains, 90% of his passion and 100% of his obsessive personality.
But her path to power, like most things involving the Redstone family, was contentious.
It wasn’t until the elder Redstone’s health deteriorated that she was able squeeze back into her father’s orbit. Earlier this decade, two women had ensconced themselves in Sumner Redstone’s life and he lavished them with gifts valued at $150 million. But by the summer of 2015, those relations had frayed. The elderly mogul was reeling from one of the women’s betrayal and prone to crying spells. That girlfriend, Sydney Holland, left in September 2015. A month later, Sumner Redstone had his other former companion, Manuela Herzer, escorted from his Beverly Park mansion. Herzer sued, claiming Redstone had lost his mental capacity.
Herzer’s lawsuit plunged National Amusements and Viacom into turmoil. Shari Redstone, who divides her time between Boston, Connecticut and Los Angeles, spent weeks assisting her father at his home and successfully defending the case against Herzer. (A judge eventually ruled in favor of Redstone.)
But it was former Viacom Chief Executive Philippe Dauman’s plan to sell Paramount Pictures that bonded father and daughter.
Sumner Redstone built his empire from a small regional chain of movie theaters. After Viacom purchased Paramount Pictures in 1994, Sumner Redstone hailed the moment as his arrival in the media big leagues. So when Dauman proposed selling Paramount to a Chinese company in early 2016, Shari Redstone dug in for a fight.
Within a few months, she and Sumner Redstone removed Dauman and his ally from the family’s investment firm, which provoked a high-stakes lawsuit. The Redstones prevailed, and Dauman, who presided over Viacom as its value plummeted, resigned.
“There was almost willful destruction of MTV, VH1 and all of those iconic brands,” said Jeffrey Sonnenfeld, a professor at Yale School of Management. “Even if you wanted to sabotage the company, it would be hard to do more damage than [previous management] did.”
Shari Redstone tried to nudge CBS to merge with Viacom, but CBS’ then-leader, Leslie Moonves, was worried that Viacom, which was grappling with a falling stock price and an exodus of viewers, would become a drag on CBS. In late 2016, Bakish was named Viacom’s CEO and he began working to rebuild the company.
He invested in programming and made acquisitions to broaden Viacom’s reach. He overhauled the management of the moribund Paramount and tossed out senior TV executives. In its most recent fiscal quarter, Viacom hit a milestone when it reported that domestic advertising had increased for the first time in five years. The company also boasts this summer’s top cable series, “Yellowstone.”
Shari Redstone “could have taken her wealth and gone on her merry way, investing in Facebook or elsewhere, without worrying about the destruction of these iconic enterprises,” Sonnenfeld said. “But she was here, trying to fix these media platforms.”
In early 2018, Redstone again tried to get CBS to entertain the Viacom merger. Talks were ongoing but collapsed when CBS’ management feared that she was trying to remove Moonves’ allies on the board. CBS’ independent board members filed suit to strip the Redstones of their voting control.
But within a few months, the court fight in Delaware was eclipsed by a scandal engulfing Moonves, who had run CBS since the 2006 split. Investigative reporter Ronan Farrow revealed allegations of several women who accused Moonves of sexual misconduct in the 1980s and 1990s. (Moonves has denied the allegations.) Within six weeks, Moonves resigned.
Behind the scenes, Redstone was instrumental in refreshing the CBS board by bouncing veterans who were friends of her father’s. But some on CBS’ board were wary. As a condition of the September 2018 settlement, she agreed to not try to orchestrate a merger with Viacom for at least two years.
Meanwhile, the media industry was rapidly consolidating. AT&T Inc. acquired Time Warner Inc., owner of HBO, CNN, TBS and Warner Bros. Disney in March completed its $71.3-billion takeover of much of Rupert Murdoch’s 21st Century Fox. This spring, independent members of CBS’ and Viacom’s boards began discussing a merger. Talks spanned months and culminated Tuesday with the all-stock deal that the two companies believe will be completed by the end of the year.
“Shari has been pretty adamant about this combination,” said Daniel A. Lyons, a professor at Boston College Law School. Tuesday’s agreement, he said, “vindicates the strategy that she’s had.”
Now, the challenge will be integrating two companies that have been separate for more than a decade. Bakish and CBS’ acting chief, Joseph Ianniello, must fuse together two different cultures and navigate the shift to streaming services.
Media observers wonder whether Redstone will position ViacomCBS Inc. for a sale — or if she will tighten her grip.
“It might depend on where the stock goes over the next year or two,” Matthews said. “But she’s finally out from under her father’s shadow, and I think she’s driven to make a name for herself and prove what else she can do.”