“Philippe has nine months to say what he is going to do differently. Talking ratings improvements isn’t going to work”

Philippe Dauman won the first round. But the fight for Sumner Redstone’s empire is far from over

Friday, Jan. 29, Stephen Read, a geriatric psychiatrist, paid a visit to the Beverly Hills mansion of Sumner Redstone, the 92-year- old media mogul. Under a court order, Read had been granted up to one hour to test Redstone’s mental competency on behalf of a client, who was suing the billionaire.

Days later, with the results of the psychiatric exam still under seal, Redstone resigned as executive chair of CBS and Viacom, the media conglomerates that he controls through his privately held company, National Amusements. For months, amid conflicting reports about his health, pressure had been mounting for Redstone to step down. The board of directors at CBS seemed well-prepared. On Feb. 3 it elected the company’s longtime chief executive officer, Leslie Moonves, to replace Redstone. The vote was unanimous. There was no drama.

At Viacom, on the other hand, things exploded. The news of Redstone’s abdication touched off a fierce power struggle, pitting Redstone’s daughter, Shari, against Viacom’s CEO and—as of Feb. 4— chair, Philippe Dauman. At stake isn’t only control of Viacom—a $14 billion corporation that owns MTV, Comedy Central, Nickelodeon, and Paramount Pictures— but also Redstone’s legacy, not to mention his sizable personal fortune, valued at more than $5 billion. It promises to be one of the most tangled and protracted succession fights since the Jin dynasty’s War of the Eight Princes.

Among the megafauna that roamed the executive suites and boardrooms at media conglomerates in the past half-century, Redstone had few equals. He was a masterful dealmaker, who over a quarter-century pulled off several improbable acquisitions, building a media superpower that spanned broadcasting, cable TV, and movies. He presided over a freewheeling creative environment that routinely cranked out zeitgeist- defining franchises— Spongebob Squarepants, Beavis and Butt-head, The Real World, The Daily Show, South Park.

The Redstone succession saga has been unfolding for decades. Questions about his health have come up at least since the 1990s, and his response has always been a variation on how he plans to live forever. This latest, if not final, chapter began on the morning of Nov. 13, 2014, when Redstone joined a routine conference call with the analysts who cover the company. At the start of the proceedings, he wished everyone good morning. His words were faint, slurred, barely audible. He sounded ill.

After the call, word spread among analysts and investors that the end might be near. Viacom and CBS could soon be in play. As the speculation grew, a Viacom spokesperson eventually addressed the issue, telling the New York Post in early December 2014 that “Sumner Redstone is as sharp as a tack, and he’s looking forward to watching the Patriots beat the Chargers on Sunday.”

Redstone, once a common sight at parties and premieres in Hollywood and Manhattan, slipped from public view. In March 2015, for the first time in years, he missed Viacom’s annual shareholder meeting. In May he missed CBS’S. Concern among investors intensified. While CBS was doing well, Viacom was not. (CBS was spun off from Viacom in 2005.) By the time Viacom presented its fiscal year results in November 2015, it was on the verge of a crisis. Ratings were way down at its major cable networks. Annual revenue dropped 4 percent. Net earnings were down 7 percent, the stock price nearly 44 percent.

When reporters approached the company inquiring about Redstone’s health, they were directed to Tom Dooley, chief operating officer and loyal No. 2 to Dauman. In June, Dooley assured a writer from Vanity Fair that while Redstone was suffering from a jaw problem, which made speaking difficult, his mind was as crisp as ever. “He’s sharp as a tack,” said Dooley.

Of all the executives, entertainers, lawyers, toadies, jesters, sirens, and hangers- on who make up Redstone’s retinue, no one has remained as close to the throne for as long as Dauman. Through a spokesman, he declined to be interviewed for this article.

When they first met in the 1980s, Dauman, now 61, was a corporate lawyer in New York, and Redstone a movie theater magnate with an appetite for takeovers. The reliable young attorney and the emotionally volcanic client hit it off, developing a father-son-like relationship. As Redstone fought with his biological children and churned through a series of top executives, wives, and girlfriends, Dauman stood by his side. By 1993, Dauman was Viacom’s general counsel and had a seat on the board. In 2006, Redstone made him CEO.

It’s a lucrative perch. Last year, even as Viacom faltered, Dauman’s total annual compensation rose 22 percent, reaching $54 million. He rules over Viacom in a riskaverse style, avoiding the spotlight and keeping the press at arm’s length. While many top entertainment executives pride themselves on their creative instincts or their deft management of capricious stars, Dauman’s strengths lie elsewhere. In a 2014 interview with Barron’s, he boasted about his analytic abilities and proficiency with math (he got a perfect SAT score). One of the keys to his success, he said, has been his ability to read his opponents and anticipate their moves. It was a skill he honed playing competitive poker, chess, and backgammon—the latter of which he played professionally after college. “If you are prepared, you know your backup position. You can see many moves ahead, and you can do the give-and-take more effectively,” he told Barron’s. “In a lot of situations, someone is bluffing.”

As Viacom struggled, some investors began to clamor for a management shake-up and Dauman’s firing. But for anyone to get rid of him, Redstone would have to go first. In the meantime, Dauman and his team kept assuring anybody who asked that Redstone wasn’t going anywhere. Sharp as a tack.

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ast fall, Redstone signed

an “advance health-care directive,” naming Dauman as the agent in charge of his medical decisions should he become incapacitated. What might have seemed like a relatively minor change in estate planning has had huge implications. Before Dauman’s designation, the role of Redstone’s health-care agent belonged to Manuela Herzer. Redstone and Herzer, now 52, dated for a couple of years beginning in 1999. They broke up but eventually reconciled and became close friends. For the last several years, Herzer had lived in Redstone’s Beverly Hills mansion, helping look after his medical care and attend to his personal affairs. In October, after an apparent disagreement, Redstone kicked Herzer out of his home and handed official health-care duties to Dauman. Herzer prepared for battle.

On Nov. 25 she filed a lawsuit in Los Angeles County Superior Court, seeking to reverse her removal as Redstone’s healthcare agent. She alleged that Redstone was incapable of making such a decision because he was no longer of sound mind. She then set out to destroy the notion, coming out of Dauman’s camp, that Redstone was mentally fit.

In 2014, according to Herzer’s complaint, before Redstone’s alarming conference call, he’d been hospitalized several times for pneumonia, resulting in significant respiratory issues. His deteriorating condition, she stated, was further exacerbated by a subsequent breakup with Sydney Holland, his much younger, live-in girlfriend. Herzer alleged that the combination of physical ailments