Sumner Redstone’s Legacy of Lunacy

Investors were initially relieved. ’ But they shouldn’t be.

SUMNER Redstone’s decline from formidable corporate chieftain to barely functioning adult has been a recurring story for a decade. Which makes the whole sordid episode now unfolding around his media empire so tragic for public investors. Redstone’s former aidgiver and girlfriend, some 40 years his junior, sued him last fall for improper dismissal, and in court documents revealed what many on Wall Street believed has been the case for years. Redstone, she alleged, is a “living ghost” who, when not demanding steaks and sex, is barely cognizant.

The publication of the lawsuit appears to have led the boards of the companies he controls (through an 80 percent ownership of their stocks), Viacom and CBS, to remove Redstone from his post as executive chairman last week. Taking over for him are CBS CEO Les Moonves and Viacom chief Philippe Dauman. Investors were initially relieved. But they shouldn’t be. Moonves and Dauman have been putting up with their boss’ antics for about as long as his behavior has been fodder for the gossip pages. And yet they and their boards of corporate “heavyweights” did practically nothing to loosen Redstone’s grip on these businesses. That is, until a judge ordered the 92yearold media maven to get a sanity exam as part of the aidgiver’s lawsuit.

You can make a case that Moonves, Dauman and their boards deserve to get one of these checkups as well.

Here’s a little taste of some of the stuff the dynamic duo and their cronies let slide: relationships with multiple younger women (we’re talking four decades here, not four years), as well as summarily firing executives or upbraiding them in public for no apparent reason — like the time he screamed at former CBS chief Mel Karmazin in front of a gaggle of reporters, “I’m in control! Remember I’m in control!”

Maybe top officials and the company’s board thought there was something cute and endearing about an old dude putting Csuite suits in their place with crazy statements, but remember their first duty is a fiduciary one to the shareholders — a concept that also seems to be ignored during Redstone’s onagain, offagain public feuds with his daughter, Shari.

He once considered Shari Redstone his heirapparent. She owns a chunk of these businesses through a trust, has a management title on Redstone’s National Amusement, which is the holding company that controls Viacom and CBS, and is vice chair of the board for both entities.

But Redstone has wasted little time publicly disparaging her when they don’t get along, even denigrating her business skills. What a way to treat your kid, not to mention the person you might want to hand the keys of the kingdom to.

The list goes on and on, but a personal favorite: The time in 2010 Redstone left a voicemail for a reporter who had just written a negative story about an apparently talentchallenged, allgirl band who Redstone took such a liking to they got a show on one of his media properties, MTV.

Redstone, suffice to say, didn’t like the story, and went hunting for its source. His proposal to the reporter: Tell him the leaker and he would be “wellrewarded and wellprotected.” As for the leaker: “We’re not going to hurt this guy.”

The reporter didn’t take the bait, but instead wrote a story about the telephone call.

I hate to give Bernie Sanders any more classwarfare material, but both Dauman and Moonves have been among the highest paid executives in the country.

Yes, CBS’s share price has done better than Viacom’s, which is firmly in the dumps, but Daumon still managed to receive total compensation of close to $40 million in 2015.

Finally getting Redstone out might be good for shareholders, until you realize what these dunderheads have to deal with: a rapidly changing future of broadcasting, as younger viewers cut the cord and refuse to pay for music videos and the stuff that made Viacom such a dominate player.

And do you really want two guys who waited this long to address Redstone’s wackiness manning the ship? Don’t say I didn’t warn you.