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A dynasty in dysfunction

A bitter fight for control of his media empire has left mogul Sumner Redstone estranged from his family.

July 23, 2007|Michael A. Hiltzik and Claudia Eller | Times Staff Writers

In his twilight years, Sumner Redstone should be relaxed, fulfilled and enjoying the fruits of his labor.

From a hardscrabble upbringing in a working-class neighborhood in Boston, Redstone has amassed a personal fortune of about $8 billion, making him one of America's richest men. The entertainment empire he built is among the world's largest, with CBS, Paramount Pictures, Showtime, MTV, Comedy Central and Nickelodeon.

His wife of four years, Paula, is half his age and lives with him in a mansion, with two swimming pools, a tennis court and screening room, in a posh gated community off of Mullholland Drive. Redstone's collection of exotic fish in a handful of tanks can be viewed from his favorite chair in the den, where he compulsively watches the stock ticker on CNBC.

But instead of contentment, Redstone, at 84, is entangled in a bitter public feud with his children and is estranged from practically everyone in his family but his wife, according to people who know him well but spoke on condition of anonymity for fear of offending him. Several of his relatives have sued him.

At the center of the dispute is National Amusements Inc., the holding company founded by Redstone's father as a theater circuit that today controls two publicly traded companies: CBS Corp. and Viacom Inc.

One lawsuit threatens Redstone's control of the media empire. Testimony and documents in that case, filed by Redstone's nephew, provide an unprecedented glimpse into the lives of the extended family, including allegations of financial chicanery and personal betrayals worthy of a Charles Dickens novel. The lawsuit claims that Redstone cheated his two children and the nephew out of portions of their inheritances to secure control over the family empire.

Over the years, Redstone has earned a reputation as a ruthless businessman, cunning legal strategist and limelight-seeking control freak. A lawyer by training, he won both Paramount and its parent company, Viacom, in bitter takeover battles. He is famous for suing his partners and pushing out chief executives who threaten his power or lack his fixation with the stock price.

But his behavior in recent years has become erratic. Last summer, he publicly dismissed superstar Tom Cruise from Paramount without telling Viacom's chief. Days later, he fired Viacom CEO Tom Freston, who had built Redstone's global cable juggernaut and was seen by many as his heir apparent.

Rivals say Redstone has lost his fastball. A split of his empire into two publicly traded companies in January 2006 has been deemed faulty by many on Wall Street. Although CBS' stock surged unexpectedly, Viacom's has languished as consumers have turned to the Internet rather than to cable programming, leading to Freston's ouster.

Redstone is showing signs of his age despite a passion for health shakes and antioxidants. Daily swims have replaced vigorous games of tennis. He shuffles feebly and no longer brags about taking Viagra.

That, perhaps, has brought the future of the family fortune into sharper relief for his relatives. Last year, his only son, Brent, 50, sued Redstone, accusing his father and sister, Shari, of freezing him out of the business. His stake in National Amusements was bought out this year in a settlement.

Now, Shari, 53, who just a year ago was anointed by her father as his heir apparent, is mulling over legal action. She and her father have been at war for months over succession, corporate governance issues and the future of the theater chain she runs. Shari is president of National Amusements and a vice chairwoman and director of CBS and Viacom. Her father is CEO of National Amusements and chairman of Viacom and CBS.

On Friday the father-daughter conflict became viciously public when Sumner, in a letter to Forbes magazine, disparaged Shari as having made "little or no contribution" to the entertainment empire he built.

Meanwhile, another family spat, now playing out in a Massachusetts court, potentially could be more costly to Redstone, threatening the mogul's control of National Amusements.

Filed in November by Michael Redstone, Sumner's nephew, and by the trustees of three trusts established decades ago by Sumner's father, Mickey, the suit alleges that Sumner wrested control of National Amusements by secretly engineering a purchase of shares from the family trusts at low-ball prices in 1972 and 1984. The redemptions, Michael Redstone contends, cheated Sumner's own children as well as his brother Edward's children, and their heirs, of their rightful interests. Edward also is named as a defendant.

If Michael and his co-plaintiffs prevail, they would end up with a majority 54.5% ownership of National worth an estimated $4.36 billion, according to the complaint. Sumner would become a minority shareholder.

Edward Redstone did not return a phone call Friday. Sumner's spokesman Carl Folta said Redstone would not discuss pending litigation.

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