The King of Content

by Keach Hagey

  For several players caught up in the drama, this earnings call was the last straw. On its heels, Lerer asked Shari for permission to be the go-between for her and his friend Aryeh Bourkoff, the founder of the boutique media-focused investment bank LionTree, who had been informally advising Salerno for months. Having watched Sumner’s battles with his daughter over decades, Salerno started out deeply skeptical that Shari could really act on behalf of her father in reorganizing his empire. But as Viacom’s performance worsened, he began, with Bourkoff’s help, to see that his responsibility to Viacom’s independent shareholders and Shari’s desire to replace Dauman were not such different objectives. Moreover, Dauman’s secret settlement talks had left Salerno with a bad taste. So on August 7, Salerno accepted Bourkoff’s invitation to Lerer’s house in Quogue, New York, where the three men hashed out the groundwork for a new settlement. Wanting to be a gracious guest, Bourkoff picked up pastries at Tate’s Bake Shop in Southampton on his way to the meeting. No one touched them—they were too scared of carbs—but the meeting later became known as the “muffin summit” after tales of the pastries made their way into the Wall Street Journal. Within two weeks, all parties had signed off on the settlement.

  It varied little from the original, except that it let most of the ousted board members stay until the company’s annual meeting the following February and did not specify which ones would be leaving in the announcement. Dauman would step down as CEO on September 13, and the new board members would start on that date, with Tom May becoming the new chairman of the board. Dooley would become interim chief executive through September 30, when Viacom’s fiscal year ended.12 After all the Sturm und Drang about Dauman’s desire to make a final presentation to the board about the wisdom of selling a stake in Paramount, in the end, he quietly handed out a memo, sold a bunch of his Viacom stock, and vanished into life as a civilian, cushioned by the silky folds of his $72 million golden parachute.13

  The weekend of the peace accord, Paramount and MGM’s $100 million remake of the 1959 classic Ben-Hur opened in theaters and flopped in epic fashion, bringing in a breathtakingly paltry $11.4 million in domestic box office. Produced by Mark Burnett and Roma Downey, who had struck gold with The Bible, the film was pitched to the religious audiences who had flocked to The Passion of the Christ but failed to elicit a similar response. Paramount vice chairman Rob Moore explained the failure as part of a broader industry trend, telling the New York Times, “Movies like ‘Ghostbusters,’ ‘Independence Day’ and ‘Ben-Hur’ certainly looked like they were going to be big going into the summer, but audiences, especially in the world of remakes, have been very tough.”14 Hollywood had run out of ideas, nowhere more acutely than at Paramount.

  * * *

  On Wednesday, September 14, the new board met for the first time in New York, and the new directors discovered that the financial situation was even worse than they had thought. Viacom’s credit was nudging into junk territory, and Paramount’s eye-popping losses were accelerating. Over a week of grim budget and strategy meetings, executives formulated a plan to stanch the bleeding: halve the dividend, tap debt markets to give the company some immediate breathing room, and, in an extraordinary preemptive step, write down $115 million for an unnamed film that had not yet been released but was apparently so unequivocally appalling that executives felt no need to guess about how it would perform in theaters. The film was later revealed to be Monster Trucks, a live-action CGI (computer-generated imagery) feature about a monster that gives a teenager’s truck special powers, inspired by a top Paramount executive’s observation that his three-year-old liked playing with trucks. The new board officially nixed the Paramount stake sale and accepted Dooley’s resignation—and $60 million payout—wiping away the major vestiges of the old regime.15 “It was pretty clear what needed to be done,” said one person familiar with the board’s thinking. “The board decided to do it all now, and have a restart of sorts moving forward.”

  But who would lead the new regime? The only obvious candidate was Leslie Moonves, CEO of CBS, programmer with the golden touch, consummate Wall Street crowd-pleaser, and expert navigator of corporate politics. For years, analysts and investors had spoken longingly about the potential to have Moonves’s creative chops guiding Viacom’s beleaguered brands, not to mention the CBS broadcast network’s all-powerful rights to the NFL and other sports when it came time to negotiate distribution agreements with cable and satellite companies for the sportsless likes of MTV, Nickelodeon, and Comedy Central.

  In television, NFL rights are the equivalent of nuclear weapons—expensive, yes, but also delivering the priceless peace of mind that nobody is going to push you around. CBS had done a masterful job using them and other sports rights, along with its stable of hit shows like The Big Bang Theory, to extract favorable deals with cable companies that carried its television stations’ signals. Meanwhile, it had also used them to squeeze ever-rising fees from the local CBS affiliates that it didn’t own, creating an investor-friendly business model that was gradually shifting CBS away from reliance on the volatile advertising market toward steady subscription revenue. At the same time, under Moonves, CBS had broken from the rest of the broadcast network owners and created its own $5.99-per-month, direct-to-consumer streaming service called CBS All Access. When it was launched, initially devoid of NFL games because CBS did not yet have the digital rights, most industry executives considered it a prop weapon with which to threaten cable and satellite companies in distribution negotiations. But CBS began feeding the service with original content, holding back some of its best-loved franchises, like the latest iteration of Star Trek, for the platform, and eventually getting the rights to show NFL games on it. After two years, it had more than one million subscribers, with projections for four million by 2020. These were hardly Netflix numbers, but they were a promising indication that quality content and brands, properly tended, just might be able to survive on their own if and when the crumbling pay-TV castle falls into the sea. This was just the glimmer of hope that Viacom’s investors needed to see.

  Moonves, meanwhile, had always coveted having a studio of his own to run, the ultimate seat of power in the entertainment industry. Over the years, he and Shari had worked out a respectful, if sometimes wary, alliance, brought together by their common rival, Dauman. When rumors began to swirl in early 2015 that Sumner’s health was slipping, which always got the media bankers licking their chops in anticipation of the potential sale or reunification of Viacom and CBS, reports surfaced that Moonves was talking to private equity firms about ways to buy out National Amusements’ controlling stake in CBS Corp.16 But as Viacom’s performance deteriorated and Shari rose to prominence, he set about wooing her in preparation for a potentially very different post-Sumner future—one without Dauman.17

  Meanwhile, there were many other purely industrial elements of the original split of Viacom and CBS in 2006 that didn’t make sense. Movie studios and premium cable channels need each other. When Paramount and Showtime were owned by the same company, they represented an elegant vertical integration. Separating them in the split meant that Viacom had to go start another premium channel, Epix, from scratch after its deal with Showtime lapsed. While Paramount’s prestigious movie studio had gone with Viacom in the split, its television production arm had gone to CBS, leaving a hole at Paramount that Brad Grey had only recently—and really too late—focused on filling by building Paramount TV again from scratch. CBS, meanwhile, had launched CBS Films to underwhelming results.

  And so, on September 29, 2016, barely two weeks after Dauman had vacated his office, National Amusements sent a letter to the boards of Viacom and CBS asking them to explore a merger, saying such a combination “might offer substantial synergies.” It preferred an all-stock transaction and warned panting bankers that it wasn’t going to entertain any deal that didn’t leave it with control of both, or the combined, companies. It was signed by both Sumner Redstone, CEO, and Shari Redstone, President, of National Amusemen
ts.18

  In principle, it made sense. “We never thought they should ever be separated,” Michael Nathanson, an analyst at MoffettNathanson, told the Wall Street Journal, adding that the 2006 split “destroyed tons of family value over a decade.” But such a public announcement handed Moonves a lot of leverage, and he had already been cool to the prospect of being saddled with Viacom’s problems. He would only want to do a deal in which CBS shares were valued at a premium to Viacom shares, and in which he could be assured the same level of autonomy to which he had become accustomed. While there were some rumors that Shari might place voting shares on the table to get the deal done, the reality was that, like her father, she was not about to dilute the Redstone family’s control over the companies.

  Nonetheless, the boards of both companies set up special committees, which hired an army of bankers and lawyers to weigh the merits of a combination.19 In private meetings, Viacom outlined a rosy future for CBS in which Viacom’s company stock, then trading in the mid-$30 range, would soon be trading at $60 a share, thanks to 5 percent annual growth in advertising revenue and other turnarounds. “CBS essentially said, Great, then go do it, and come back to us when you have,” said one person close to the talks. With little enthusiasm from Moonves, the investment bankers never got far. “It takes two to tango,” said one person close to the talks. “Shari went through a summer of fighting to replace a CEO of one of those companies. It’s very hard to turn around and battle another CEO. I’m not sure she had it in her to go all the way.”

  But when it came to protecting her father against the women she felt had preyed on him, Shari did have it in her—and then some. While the special committees and their advisers weighed the future of the media empire, Rob Klieger prepared a blockbuster lawsuit to go after Manuela and Sydney in exactly the way they had always feared. On October 25, 2016, Sumner sued the women in Los Angeles Superior Court for elder abuse, seeking to reclaim the full $150 million he had given them “with interest.” Klieger insisted that, despite Shari’s past threats to sue the women, “Shari implored her father not to file his elder abuse suit. Had Sydney and Manuela kept Sumner from his family until his death, Shari would have gladly gone to war with them. Now that she had her father back, she wanted nothing more than for Sydney and Manuela to be gone from their lives forever. She would rather have them keep the money than continue to be part of the mix.”

  Sydney’s and Manuela’s lawyers, meanwhile, allege that Shari is behind the entire thing. They note that the suit was filed at a time when Sumner could not even talk, let alone hire counsel for complex litigation.

  It was a highly risky maneuver for someone who had just pulled off an astonishingly successful corporate coup. By arguing that Sumner had been so susceptible to undue influence that the women were able to drain his bank accounts without his true approval, Klieger was stepping dangerously close to undermining the argument for Sumner’s current mental capacity upon which many of the decisions from the last year—and indeed Shari’s rise to power—rested. (Though in this context, Klieger’s argument that it didn’t matter whether Sumner had capacity or not since Shari had the votes takes on greater meaning.) It also raised the question of why Shari, as a member of Viacom and CBS’s boards, did not voice her concerns about her father’s mental state sooner, if she was getting reports as far back as 2014 about him being routinely reduced to tears by women half his age.20

  The suit against the women dismayed some members of Shari’s inner circle, who felt that Shari should quit while she was ahead. But as the months of litigation turned to years, a funny thing happened: nothing. Sumner’s legal team was able to fight back the women’s attempts to have him deposed. Manuela was ejected from the Carlyle Hotel apartment. As of spring 2018, the litigation is still pending, but so far, the risks that Klieger took for the Redstones have all paid off. In July 2017, he was voted onto the CBS board.

  * * *

  With Dooley gone, somebody needed to keep the trains running at Viacom while the special committees weighed the merger. The job required a rare combination of competence and humility, since it was entirely possible that Moonves would soon come along and make this person redundant. Bob Bakish fit the bill perfectly. As the CEO of Viacom’s international division, he had run the one corner of the company that had a positive story to tell, while being mercifully shielded from the past year’s drama.

  Tall, ruddy, and broad-chested, with a bit of chest hair often peeking up from his open-collared shirt, Bakish exuded an affable everyman quality. He was a technocrat, not a creative visionary, but his time overseas in countries with markedly different television distribution systems had given him creative ideas about how Viacom’s channels could be packaged and distributed. Most important, he was not a bullshitter. He became acting CEO on Halloween.21

  Six weeks later, with Moonves still unenthusiastic about the merger idea and Viacom’s latest quarterly earnings showing a 25 percent drop in profit, National Amusements called off the merger talks and named Bakish permanent CEO of Viacom. Wall Street whispered that Moonves had dug in, but Shari gushed that it was the strength of Bakish’s turnaround plan that made her change her mind. Bakish promised to restore Viacom’s creative culture, fix its frayed relationships with distributors, and rein in Paramount’s finances while pushing the studio to mine Viacom’s channel brands like MTV and Nickelodeon for more of its movie ideas.

  Most important, if unsaid, was that he was Shari’s guy. He welcomed her input, and she, in turn, rhapsodized over his brilliance. After years of caginess and spotlight-dodging, she seemed to visibly relax and began to do more public speaking, taking questions in live settings on everything from the need for scale among big media companies to the opportunities that blockchain technology presents to tech investors. Every now and then, she would toss off her father’s old adage that “content is king.” But mostly she would praise Bakish, bragging that he was restoring the culture that defined Viacom in her father’s heyday. This is literally true: under Bakish, MTV has rebooted TRL, Unplugged, and even the Jersey Shore franchise, hoping to reclaim its lost magic.

  By the end of 2016, with her hand-picked CEO installed, the media and entertainment industries had settled into the realization that Shari was finally her own mogul. The Hollywood Reporter named her its “Women in Entertainment Executive of the Year” for her “success at cleaning house in the family’s business—both public and private.” Even as, with lawsuits pending, everyone continued to tiptoe around exactly how she did it, the industry was deeply impressed by this gladiator in its midst. She bent her head gratefully for the laurels. “This was a really difficult year for me personally, my family, professionally—and looking back on what we were able to achieve is incredible,” she told the magazine.22 Media columnist Michael Wolff dubbed her an “accidental mogul” but noted that she was also “the first woman as media mogul,” bringing with her all the supposedly womanly—if decidedly un-Redstonian—qualities of patience, humility, open-mindedness, and empathy.23 She continued to insist that she didn’t want to run the companies, only to ensure they had good CEOs and strong boards. “When they need me, I’m there, and when they don’t need me, I’m on to my nonprofit work and the work that I do at Advancit.”

  As a mogul, her most important responsibility was to ensure that the nightmare of the last year did not play itself out again in thirty years. And so, in the midst of all the fighting, she quietly brought her son Brandon aboard National Amusements as a director. Now all three of her children served on the National Amusements board, poised to take up the mantle of another generation of oversight over the family media empire. While each has a distinct personality—Kim is a do-gooder, Brandon a showman, Tyler a fixer—there are no signs of the kind of dissension between them that marked Shari’s relationship with her brother, Brent. They run a charitable foundation together and, as court documents showing their efforts to gather information about Manuela and Sydney revealed, work together as a team. Shari and Ira’s marriage migh
t not have worked out in the end, but it was not the daily screamfest that Sumner and Phyllis’s was when Shari and Brent were growing up. While Sumner loved his children, he also made clear to them in ways large and small that they always came second to his first love, his business. By contrast, the people whom Shari prioritized when she insisted on being home for dinner every evening are now her fellow board members and trustees.

  With Bakish installed in Dauman’s old office on the fifty-second floor of Viacom’s headquarters, Shari set about refurbishing her father’s old office down the hall, with its dizzying wraparound view of One World Trade Center looming above the lower half of Manhattan like an obelisk. Her taste is spare, if not Spartan, a subdued symphony of cream and beige. Among the few decorations is a painting by her friend Jill Krutick, a blurred abstraction in mauve and gray that mirrors the hazy skyline in the distance; a framed jersey of the New England Patriots quarterback Tom Brady; framed photos of her cherubic, dark-haired grandchildren; and a small snapshot of her next to her father, both dressed in Patriots jerseys. She’s giving a thumbs-up. He looks like a corpse.

  Epilogue: The First Female Media Mogul