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The Last of the Titans

In an era of shareholder clout, Sumner Redstone and Rupert Murdoch exert the power of old-time media moguls.

September 18, 2006|Thomas S. Mulligan, Charles Duhigg and Claudia Eller | Times Staff Writers

They are sons of strong women. Both have sparred publicly with their heirs, both are plotting to conquer China, and both seem to view immortality as their best succession plan.

But what really unites Viacom Inc. Chairman Sumner M. Redstone and News Corp. Chairman Rupert Murdoch is that, to a degree almost unknown today among heads of U.S. public companies, they can do as they please.

Redstone and Murdoch are part of a line of autocratic media titans stretching to CNN founder Ted Turner, William S. Paley of CBS, Henry Luce of Time Inc., newspaper baron William Randolph Hearst and such lions of early Hollywood as Louis B. Mayer and Adolph Zukor. Their power derives not just from their dominant stakes in the companies they've built but also from their inclination to use it.

"The amazing thing is that when Rupert says 'Let's do it,' everyone drops everything to focus on whatever he wants," said one News Corp. executive. "It's like an army that can turn on a dime."

Today, as the digital revolution is overturning old-media business models and new threats and opportunities are materializing at video-game speed, a leader's ability to act boldly and unilaterally -- without having to consult lawyers, directors or Wall Street in advance -- can be a powerful advantage.

In fact, when Murdoch decided to make his move into new media, he didn't order up strategic studies but took the company checkbook in hand and spent $2 billion on acquisitions, sometimes holding talks without keeping even his top executives in the loop.

"There's a huge difference between executives who rise up through the ranks versus a founder-executive in terms of personality and style," said Lilli R. Friedland, a psychologist in Century City who advises business executives on strategies, collaborative skills and succession issues.

Because these individuals are excruciatingly possessive about what they've built, she said, they can never let go, even in their waning years.

"I am Viacom," Redstone, 83, said in a recent interview. "My life is Viacom and it continues to be Viacom. I live the company that I built from three drive-in theaters," a business he inherited from his father. He controls about 70% of the voting shares of Viacom and of CBS Corp., which were split apart in January.

Redstone's latest display of owner's prerogative came this month, when he abruptly fired Viacom Chief Executive Tom Freston, the 26-year cable veteran he'd chosen less than a year earlier to run the company after the CBS split. The Freston ouster came two weeks after Redstone had publicly cut ties between Viacom's Paramount Pictures and its top movie star, Tom Cruise, saying Cruise's erratic behavior was costing the company money.

Both actions show that Redstone "wants to raise his profile and show he's in command," said Neal Gabler, who has written extensively about Hollywood and is a panelist on News Corp.'s Fox News Watch.

In defiance of his age, Redstone shows the kind of restless energy that an Olympic athlete might envy. What drives him, those who know him say, is a competitive fire that gets kindled by such things as his rivalry with Murdoch, 75.

In one sense, theirs is like the rivalry between San Francisco and Los Angeles: It irritates San Franciscans, while Angelenos pretend it doesn't exist.

Certainly Redstone is more likely to mention his opponent, as he did this month when he railed in an interview about News Corp.'s $580-million purchase a year ago of the wildly popular Internet hangout "We could have had the thing for $500 million had we moved in before Murdoch thought about it," Redstone said, implicitly blaming Freston for dropping the ball.

If Redstone's name seldom escapes Murdoch's lips, that doesn't mean he's not paying attention. In the MySpace deal, News Corp. burst in with a preemptive offer after learning that Viacom was in discussions, keeping one of the hottest names on the Internet from hooking up with his rival's most powerful franchise, the youth-oriented MTV Networks. The deal was done in record time: one month, start to finish, according to people who worked on it.

Murdoch trumped Redstone again months later. Viacom executives were so close to signing a deal last September to buy San Francisco-based IGN Entertainment Inc., which runs video-game websites, that they had scheduled a victory dinner. Murdoch and his top lieutenants staged a stealth attack, signing a $650-million purchase agreement the night the Viacom dinner was to be held, according to two people involved.

"People have said that [Murdoch] takes gambles more easily than I do, but I'm not sure that's true," Redstone said. "I would say we're very much alike."

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