AP News, July 21st, 2007
A family rift at Viacom Inc. and CBS Corp. widened Friday as Sumner Redstone, the chairman of both companies, took aim at his daughter Shari, who had been widely expected to succeed him, in a letter faxed to Forbes magazine.
The letter came out a day after Fortune magazine and The Wall Street Journal reported on the dispute, which could put the future control of both companies in question if Shari winds up exiting her father's media empire. Shari, who is 53 years old, serves as a director and vice chairman of both companies. Her father is 84.
The articles quoted people familiar with Shari's thinking as saying she had had differences with her father over corporate governance issues, including Shari's effort to tie executive compensation more closely with financial performance.
The differences between the elder Redstone and his daughter raised doubts about her role as his apparent heir to the helm of both companies, though Shari hasn't spoken publicly about what communication she may have had with her father on the question of succession.
"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 his letter, which Forbes posted on its Web site Friday afternoon.
The spat comes less than six months after Redstone settled a separate dispute with his only other child, Brent, a lawyer who lives in Colorado. The elder Redstone wound up buying out his son's interest in National Amusements Inc., a privately held company that owns a chain of movie theaters as well as voting stock in CBS and Viacom, which controls a majority of the shareholder vote in both companies.
That restructuring left Redstone owning 80 percent of National Amusements and Shari the other 20 percent. Redstone said in his letter Friday that he would consider buying out Shari's interest, "as long as the price is acceptable."
Shari Redstone released a statement through a spokeswoman late Friday saying that she wasn't looking to be bought out, but that if it came to that she would consider selling her stake in a deal that valued National Amusements at a publicly quoted figure of $8 billion, which would make her stake worth $1.6 billion.
"Anyone who knows Shari Redstone knows that she is one Redstone family member who does not aspire to power or covet titles, but rather is committed to the companies' best interests," the statement said. "It is unfortunate that Sumner has chosen to publicize what Shari had hoped would remain a private family matter."
Sumner Redstone has a history of clashing with executives. Last September he ousted Tom Freston as the CEO of Viacom after just eight months, installing longtime adviser Philippe Dauman, and in 2004 Mel Karmazin quit as president of Viacom after a long period of butting heads with Redstone. Just weeks before ousting Freston last year, Redstone also ended a 14-year relationship that Viacom's Paramount movie studio had with the actor Tom Cruise.
Redstone closed his letter by saying: "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."
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On the Net:
Sumner Redstone's letter in Forbes: http://tinyurl.com/yuzsxd
