CHRIS BANNON: Just as the Bancroft family found themselves in a nasty tiff over the future of The Journal, Sumner Redstone and his daughter Shari are locked in a tug-of-war over the future of National Amusements Incorporated.
Now that’s the parent company of a large group of media companies, CBS, Viacom, Paramount Pictures – the list goes on and on. It adds up to a $50 billion business. Sumner Redstone is the 84-year-old CEO and chairman. He’s been squabbling with his daughter and heir apparent over the family business, and it’s a squabble that dad made embarrassingly public with a stinging fax he sent to Forbes Magazine.
Peter Kafka is the managing editor of The Silicon Alley Insider. He’s been following this story. Peter, welcome to On the Media. PETER KAFKA: Thanks for having me. CHRIS BANNON: Lay it out for me. What caused this rift between Redstone the Elder and Redstone the Younger? PETER KAFKA: Money. CHRIS BANNON: Well, that was simple. PETER KAFKA: [LAUGHS] Right. Sumner Redstone is worth a heck of a lot of money. CHRIS BANNON: Yeah. PETER KAFKA: His daughter is as well. Presumably, if she inherits most of Sumner’s company she’ll be worth even more, and there’s been an ongoing dispute – this goes for many years – over whether Shari would actually inherit the company from Sumner or whether he’d actually have to go out and hire a professional CEO to run the company, because you can’t actually just have your daughter take over for the company when you’re running a public company. CHRIS BANNON: But she has been running a branch of the company, and from what I’ve read, she’s done pretty well. PETER KAFKA: She runs the theater company which is based in the Boston area. It’s where Sumner Redstone sort of made his bones originally, and he used that to sort of create the Viacom empire that he runs now.
But she’s not really running Viacom as we know it, which is MTV Networks, CBS, DreamWorks, Paramount, etc. CHRIS BANNON: So is it a case that he feels she just doesn’t have enough experience to take this over? Because I don’t think it’s uncommon for families to pass down management. I mean, if you look at the Sulzbergers, for instance, The New York Times, it’s a common practice in business. PETER KAFKA: No, no, you certainly do have people who run public companies essentially handing the company over. You’re seeing that most likely when Rupert Murdoch retires one day from News Corp. That’s happened in Comcast with the Roberts family, and much less successfully at Cablevision with the Dolans, so it certainly does happen.
Sumner Redstone mainly doesn’t believe that he’s leaving any time soon, for one thing, and part of this is that Sumner Redstone’s health is something that’s widely discussed but not really reported about very much, so they’re sort of debating whether he’ll be here forever or maybe a few more years. CHRIS BANNON: [LAUGHS] I think we can rule out forever.
CHRIS BANNON: Well, you never know what kind of cryogenics he has available in Beverly Hills. Sumner doesn’t tend to get along with lots of people, both who work for him, and his son, Brent, sued him for a billion dollars last year. This sort of stuff is not uncommon for him. CHRIS BANNON: This is an excerpt from the infamous fax that Redstone sent to Forbes last month, when the issue of who was going to succeed him in the company came up.
And he wrote, I quote, “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 help of the boards of both companies.” That was my best media plutocrat voice. PETER KAFKA: I think it’s supposed to sound more like Smithers from The Simpsons. CHRIS BANNON: [LAUGHS] I should have practiced. I mean, there’s no “love, dad” at the bottom of that. Why did he send such a scathing letter, you know, something so public? PETER KAFKA: God bless him. I guess he felt that he wasn’t being heard adequately and the best way to do that is simply have someone print your letter in public, which Forbes went ahead and did on their website.
Sumner is correct in that letter. He built that company. Shari Redstone did not build that company and his son Brent certainly didn’t either. But his line about “with the help of the board,” this is sort of one of his favorite dodges.
Whenever Sumner Redstone makes a decision like, say, firing Tom Cruise and Tom Freston last year, which shook up most of the world, he says, well this is what the board decided to do, and while technically, letter of the law, he’s got a board that fits the SEC’s description of what an independent board is, this is still very much Sumner Redstone’s company and Sumner Redstone’s board.
And so when he says the board, he’s saying Sumner Redstone. CHRIS BANNON: Well, let’s look at the Redstone family versus the Murdoch family. How are these two families different in the way that they’re passing on or not passing on power? PETER KAFKA: Well, they’re actually kind of similar in that you’ve got kids jockeying for position. You’ve got an aging patriarch running the company. One big difference is Rupert Murdoch is in his seventies, and if you ask him who’s gonna succeed him he’ll say, well, it’s up to the board, ‘cause that’s what you have to say.
But again, it seems pretty clear that someone named Murdoch’s gonna run that company, and for a long time it was gonna be his son Laughlin, and Laughlin left last year in a huff.
So now you’ve got James Murdoch, the youngest of his second set of kids, who’s I think in his early thirties, clearly, probably is not gonna run the company any time soon but looks like the heir apparent. You’ve also got a player here named Wendy Murdoch, who used to be Wendi Deng.
She’s Murdoch’s third wife and she’s been given a lot of power at News Corp. She’s now sort of heading up their China venture. You would expect that maybe she’s gonna have a lot to say about what happens in that company. CHRIS BANNON: Now, at a board meeting Wednesday in New York, Sumner and Shari were supposed to come face-to-face for the first time in months. Do you know how has Viacom done in this quarter? Is the company in good shape? PETER KAFKA: Viacom announced earnings this morning. They did quite well and, you know, this is the thing about caricaturing Sumner Redstone as this doddering old man clinging to life and feverishly watching his stock price.
If you’re Sumner Redstone right now, you sit back and you say, well, everyone’s – you know, saying that I’m out of it, etc., that I’ve lost my touch, but you can’t really argue with my stock price. CHRIS BANNON: Peter, thanks very much for joining us. PETER KAFKA: Thanks for having me. CHRIS BANNON: Peter Kafka is the managing editor of The Silicon Alley Insider. [MUSIC UP AND UNDER] BROOKE GLADSTONE: Coming up, the NFL squares off against sports reporters, and Google is on your side when it comes to cell phones. CHRIS BANNON: This is On the Media from NPR. [MUSIC UP AND UNDER]