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`Family Feud' may be new CBS, Viacom reality show

Shari Redstone had been expected to one day succeed her father. That may change.

July 20, 2007|Thomas S. Mulligan and Claudia Eller | Times Staff Writers

NEW YORK — Shari Redstone first got the impression that there might be a move afoot to force her out of her family's media empire last summer when she failed to receive notices of some board meetings.

Now, it could happen.

At a time when she's planning for what should be a joyous family event -- the September wedding of her 25-year-old daughter -- Redstone, 53, is immersed in a bitter feud with her media mogul father, Sumner.

The dispute could see her sever ties to CBS Corp. and Viacom Inc., where she serves as a director of each in helping oversee such assets as the CBS network, MTV, Nickelodeon and Paramount Pictures.

If that happens, Shari would join a growing list of Redstones who have left the family-controlled business after tangling with the iron-willed, 84-year-old Sumner Redstone.

Her brother, Brent, was bought out by his father to settle a lawsuit. In Massachusetts, a judge is expected to rule shortly on whether a suit brought by Sumner Redstone's nephew, Michael D. Redstone, could go forward. He alleges that his uncle cut him and his late sister out of a stake in the family business that could be worth more than $1 billion today.

A codefendant in that case is Edward S. Redstone, Michael's father and Sumner's brother, who himself was separated from the company after a years-ago legal tangle with Sumner.

Unlike the other disputes, however, the father-daughter feud clouds the succession picture. For years, it was practically a given that Shari Redstone would run the company after her father's death.

Instead, fractures started showing.

"She'd be in good stead sometimes and sometimes not," a person familiar with the situation said. "That was the roller coaster she was riding."

Through lawyers, father and daughter have been involved for months in negotiations that could lead to Shari Redstone giving up her board seats.

Still, a spokeswoman for Shari indicated Thursday that she would resist such an effort.

"Shari remains an active and involved member of both the CBS and Viacom boards and has no intention of resigning, nor has anyone asked her to resign," spokeswoman Nancy Sterling said.

In an interview Thursday, Sumner Redstone declined to discuss the situation in detail.

Asked whether he opposed naming his daughter to succeed him as chairman, he said: "I have always believed and consistently stated that the rules of good governance require that my successor -- if I ever die -- should be selected by the boards of the two public companies, Viacom and CBS."

Two people familiar with his views said the dispute was really about control of the company after he dies and his daughter's desire to take his place.

Another source suggested that Shari Redstone's concerns were less for her own career than for protecting her children's inheritance. Shari declined to comment.

Other potential outcomes from the negotiations would be for Sumner Redstone to buy out his daughter's stake in the company, as he did her brother's, or for Shari Redstone to acquire ownership of the family's theater chain, National Amusements Inc., which she now runs as president, a person familiar with the situation said.

Yet another scenario could have her retaining active roles in CBS and Viacom and remaining on the boards.

After the dispute was disclosed Thursday in articles on the websites of Fortune magazine and the Wall Street Journal, speculation rose that one or both companies could be sold.

But a person familiar with the mogul's thinking said he had no intention of selling the companies. He controls about three-quarters of the stock of both Viacom and CBS through National Amusements.

Part of the Redstones' disagreement, according to sources, stems from Shari's efforts to help constitute the new boards of Viacom and CBS when the companies split in January 2006. Shari, as newly named nonexecutive vice chairwoman, researched and interviewed several nominees for the boards with an eye toward increasing independence and outside oversight.

"Shari really made efforts to bring modern corporate governance to these boards with regards to director independence and representation of all the stockholders," said a person familiar with the two boards. "It appears that she and Sumner did not share these priorities."

Of the four directors who Shari recruited for the CBS board, for example, two left after less than a year because they were uncomfortable with the board's approach to corporate governance, the person said.

The two departed directors, former ITT Corp. finance chief Ann N. Reese and former Sara Lee Corp. finance chief Judith A. Sprieser, were unavailable for comment Thursday.

thomas.mulligan@latimes.com

claudia.eller@latimes.com

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Mulligan reported from New York, Eller from Los Angeles.

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