Redstone Family Feud Goes Public
Viacom Chairman Blasts Daughter, Who Hopes to Succeed Him

By Frank Ahrens
Washington Post Staff Writer
Saturday, July 21, 2007

Viacom Chairman Sumner Redstone blistered his daughter Shari in a letter faxed to Forbes magazine yesterday, making a long-simmering family dispute very public.

Shari Redstone has said she wants to succeed her billionaire father -- who is 84 and shows no sign of slowing down -- as head of the business he started more than 50 years ago when he took over his family's three drive-in movie theaters.

Viacom, which owns MTV, Nickelodeon and other cable networks, split from CBS last year, though Redstone remains chairman of both media giants, a job Shari -- who is vice chairman -- has long coveted.

Not so fast, her father said yesterday.

"I am determined that in accordance with the rules of good governance, the boards of Viacom and CBS select my successor -- and that no person be imposed on the boards," Redstone wrote in his letter.

Just to make certain that Shari, 53, got the point, Sumner Redstone concluded his letter: "It must be remembered that I gave to my children their stock; and it is I, with little or no contribution on their part, who built these great media companies with the help of the boards of both companies."

Last night, Shari Redstone fired back at her father, though in more-reserved language, through spokeswoman Nancy Sterling.

"It is unfortunate that Sumner has chosen to publicize what Shari had hoped would remain a private family matter," Sterling wrote in an e-mail to Bloomberg.

The market shrugged in response to the spat. Viacom closed down $1.20 at $41.30, yesterday, in line with the drop in stocks across the board.

It is unclear what the father-daughter fight may mean to Viacom and CBS. When they split last year, Viacom chief executive Thomas E. Freston was seen as Redstone's likely successor. But Viacom stock fizzled after the split, and Freston passed up a chance to buy MySpace and was forced out, replaced by longtime Redstone loyalist Philippe P. Dauman. Now, CBS chief executive Leslie Moonves, who has watched his company's stock gain steadily since the split, may be first in the line of succession.

Why would a father do such a thing to his daughter? And why now? The best explanation may be: It's just Redstone being Redstone.

He is a free speaker and can make life tough for his staff, some of whom charitably say that he at least is predictably unpredictable.

This time last year, Redstone made headlines by severing ties between Paramount Pictures, which is owned by Viacom, and Tom Cruise after the actor's memorable jump-about on Oprah's sofa. At the time, Redstone said that Cruise's "recent conduct has not been acceptable."

Redstone can get fixated. To the puzzlement of many video game industry analysts, Redstone poured millions into Midway Games even after it was unable to come up with a successful successor to its popular Mortal Kombat games. After an interview about Midway with a reporter some years ago, Redstone faxed him articles about the gaming industry every day for a week, complete with enthusiastic handwritten notes.

And why now? Tensions between father and daughter began to leak out in recent days but have been simmering for some time, at least since Sumner divorced his wife of five decades, Phyllis, in 2002, and married Paula Fortunato, nine years younger than Shari. Sumner and Fortunato moved to Los Angeles, far from Shari, who lives in Boston. He told CNBC this year, "My wife is closer to me these days than my daughter." Though she has shown an interest in learning about her husband's entertainment holdings, the former schoolteacher is not seen as a possible successor to head Viacom.

The Redstones' personal and business lives have long been intertwined. Sumner controls 80 percent of National Amusements, the privately held owner of 100 movie theaters in the United States, England, Russia and Latin America, and is the chief executive. Shari holds the other 20 percent and manages the company. Sumner Redstone turned over majority control of Midway to Shari in 2005.

In his letter to Forbes, Sumner said he would consider buying his daughter's stake in the theater company. In her statement last night, Shari responded that she had no desire to be bought out.

Sumner Redstone's son, Brent, who owned about 17 percent of National Amusements but was prohibited from selling it, sued his father last year to break up the company so he could get his money out. Father and son settled this year for an undisclosed amount.

National Amusements has voting control of Viacom and CBS -- meaning, essentially, Redstone runs everything. And he is likely going to keep doing so until he dies.

Shari Redstone recently attempted to introduce what she has called additional good-governance practices into Viacom.

"While my daughter talks of good governance, she apparently ignores the cardinal rule of good governance that the boards of the two public companies, Viacom and CBS, should select my successor," Redstone wrote in the letter.