At 95 years old, Sumner Redstone technically remains the controlling shareholder of both Viacom and CBS Corporation. That raises questions about what happens to those companies when Redstone passes away.
Keach Hagey of the Wall Street Journal has a new book on Redstone called “The King of Content: Sumner Redstone’s Battle for Viacom, CBS and Everlasting Control of his Media Empire.” She talked with Marketplace host Kai Ryssdal about how Sumner Redstone built his empire and his plan for controlling it from “beyond the grave.” The following is an edited transcript of their conversation.
Kai Ryssdal: This is a tricky way to start a radio interview — but I need you to do a little org chart for me here: National Amusements, CBS and Viacom. The three sort of legs of the Redstone empire. Could you explain how they relate to each other?
Keach Hagey: Sure. National Amusements is the family holding company that the Redstone’s control. It was a Drive-In theater company that is still a movie theater company today. It just happens to also own the controlling stock of Viacom and CBS, two rather large public media companies.
Ryssdal: Got it. That totally makes sense. Now let me back you up a little bit and point this out and then get your reaction. You say somewhere in this book that Sumner Redstone — or you point out I suppose — that Sumner Redstone was like 63-ish or something before he, in his own words, became like a media mogul, I guess right? I mean he had a long and fruitful career before he got into this business.
Hagey: Right. He was a movie chain executive for an entire career. He could have easily retired and played golf and that could have been it.
Ryssdal: Except, he decides at the ripe old age of 63 that he wants to do something else. Give us the origin story of how National Amusements became, as you pointed out, this thing that owns CBS and Viacom.
Hagey: So Sumner Redstone was a very successful regional theater chain owner who had sort of a national profile and he had a little side hobby of investing in movie studios. So in the late ’70s and early ’80s he started making a bunch of those bets, invested in Fox, things like that, and did really well. Scary well. And he got a bunch of money and he started to look around at what else he could invest in and saw this rather new company called Viacom which had been spun off from CBS in the ’70s. And at first he started just dabbling to do a little investing, and at some point in the process decided he wanted to take the whole thing over, and he did.
Ryssdal: So here you have a man who is like 90 something now right? How old is he?
Ryssdal: He’s 95. He has not been heard to speak, I think, in public in four or five years. He is … one doesn’t really know what state of mind he’s in, right? And yet here we are talking about him.
Hagey: We’re talking about him a lot because he made kind of a mess of his succession planning frankly. Its incredible. Sumner Redstone always claimed that he was never going to die. And seems like it might be true. He would proudly say that, kind of as a joke, to reporters for years. “I’m never going to die, I’m going to control this even from beyond the grave. I don’t have to do any succession planning because I’m never going to die. Ha ha.” Except that, he kind of meant it and he thought that he was going to lawyer his way beyond the afterlife and decide how his companies were going to be run. And he did a really bad job of that, in part because he probably didn’t give it all directly to his family in the way he should have. And that mess of the last three years that we’ve seen is the result of that.
Ryssdal: Well so talk to me for a second about his family and succession plans and there are lawsuits and takeover bids and his daughter Shari Redstone is now nominally in control of this company. What is the current state of play?
Hagey: The current state of play is that Shari Redstone is in control of her father’s media empire. Many people close to him say that is something that he didn’t want and there is a big legal fight stretching before us over this summer about how she has chosen to use that control and whether she’s going to retain it.
Ryssdal: Is she going to be — well let me back up, one of the hallmarks of Sumner Redstone as an owner and tycoon is is pitting various subordinates against each other. He’s a volatile guy himself. He’s got a temper, you know, I mean crotchety is being extremely kind. What will she be like running this company given now the way media conglomerates are growing in this economy?
Hagey: Well Shari Redstone has kept her cards pretty close to the vest. She’s different than her father in that she she listens a lot more, she seeks more counsel, she’s much more behind the scenes. You know Sumner used to love to call up reporters and give them an earful and they loved him as a result. He was great fun to cover in the ’80s and ’90s. Shari is not like that at all. But as we’ve seen through her attempts to merge CBS and Viacom, she is not retiring. She is actively trying to shape the fates of these media companies and what she sees is a field of rapid consolidation where you better get bigger or you’re in big trouble.