A Mogul in Full

At 82, Sumner Redstone, a billionaire eight or nine times over, controls not one, but two giant media companies after splitting apart his Viacom empire in January. One is CBS Inc. (CBS network, Showtime and CBS Radio, the former home of Howard Stern). The other is the new Viacom (MTV, Nickelodeon and Paramount Pictures, among other operations). Redstone retains overwhelming shareholder control and remains chairman of both companies, which paid him a combined $24.4 million in salary, bonuses and other compensation for 2005. Yet in a few small ways, Redstone is just a regular guy. Consider, for instance, that he and wife No. 2, Paula Fortunato, a 42-year-old former teacher ("My most successful merger," Redstone says) like to occasionally stroll

over to the fence surrounding their Beverly Hills mansion to sneak food to the neighbor's dogs. It's just for fun. (Redstone, by the way, doesn't think his neighbor, Sylvester Stallone, neglects his pets.)

It's a welcome diversion from all that he has on his mind these days. The stock price of each company continues to sag, even though part of the reason he split Viacom in two was to provide a boost to the shares. He's grooming his daughter, Shari, 52, to step in for him--but not before, Redstone makes clear, he exhales for the final time. His plans for succession set off a family feud this year; his son, Brent is suing Sumner and Shari, arguing that he's been sidelined and demanding a $1 billion cut of the family fortune. At CBS, meanwhile, Katie Couric is coming onboard soon, under intense scrutiny for how she might shake up the traditional evening-news format. At the same time, CBS is suing departed star Howard Stern, alleging he illegally used CBS's airwaves to promote his new employer, Sirius. CBS wants to wrest from Stern a $200 million bonus that Sirius paid to the radio talk-show host. (Stern has denounced the lawsuit as "personal vendetta.")

Then there's Brad Grey, the superstar television producer and Hollywood talent manager. Hired early last year by Viacom as chairman of Paramount Pictures, one of the most powerful posts in show business, Grey is becoming increasingly prominent in a widening Hollywood wiretapping scandal. The unfolding story stars the rogue private eye Anthony Pellicano--who allegedly had a penchant for illegal bugging--and some of the industry's most influential figures, including Grey, and their powerful lawyers, for whom the detective worked. In his interview with NEWSWEEK, Redstone offered unqualified support for Grey. "I have absolute unequivocal faith in the integrity of Brad," he said. "When Brad came aboard, he told us everything there was to tell us about what was going on with Pellicano ... I would be shocked, truly, if Brad engaged in any--never mind illegal, but in any--inappropriate conduct."

Last Friday, two days after his NEWSWEEK interview and the day after a dinner with Grey and others, Redstone awoke to a front-page story in The New York Times further detailing Grey's involvement with Pellicano. Redstone said later that Grey still had his support. "I have read The New York Times, and I still say I saw nothing in it that would make me change my opinion," he said. Other excerpts from the conversation:

REDSTONE: Shari's working very hard. She has played a major role in forming the boards of both CBS and Viacom, a major role in setting the agendas for the companies. She works with Tom [Freston] and Les [Moonves] on strategic matters. She's doing a great job. As much as she's doing, she'll do more and be more involved.

Do you think they'd tell me? Originally, I think there were a lot of misgivings. But now, from the best I can see, she's very well liked within the companies--as is my wife. I have two women who are well liked at the companies.

How do I look to you? I get up in the morning everyday at 5 o'clock ... I'm on a bike for 35 minutes, exercising. I then swim a number of laps. I'm very conscious of nutrition and exercise. I don't remember a time in my life when I felt better. I've lost over 15 pounds recently. You know why? Starved cats live longer than fat cats, and I would prefer to be a starved cat. There's no chance of me retiring.

The lawsuit doesn't bother me. It has absolutely, unequivocally no merit. It has no effect on the new CBS or new Viacom. But it is painful to me. I know it's painful to my daughter. I'm sure it's painful to Brent's mother, who's heartbroken about it. It may even be painful to his children.

I really don't think so. Most of the stories are heroic stories--stories that people can be proud of ... So I would expect this movie, particularly because it's done by Oliver Stone, to be well received.

I said from the beginning that the split, in which I'm a total believer, would not do it. It would depend upon the performance of the companies. And there's a lot of work to be done before these companies perform as they should. Not that I would have split Viacom only because of the stock. I believe we have the financial, strategic and operational power to grow these companies as we never could have before. Certainly, the stocks of the other [media] conglomerates aren't moving. Those companies will sit still and wait. I'm not content to sit and wait. I consider my responsibility to adjust to a changing world, and the world has changed. I think within a year you will see the companies performing as they should.

The studio is on the upswing. We just opened a picture, "Failure to Launch," that did twice [in ticket sales] what anyone expected. We are opening "Mission: Impossible 3" in May. That's followed by "Nacho Libre," with Jack Black. That's followed by Oliver Stone's "World Trade Center." DreamWorks had a picture, now Paramount's, which is called "Dream Girls" with Jamie Foxx, Beyoncé and Eddie Murphy. And I understand it's phenomenal. So you will see the old Paramount, maybe better than it ever was.

I think they may very well be. They are both fierce competitors. And that doesn't bother me. Their styles are little different. Tom seems to be more laid back. He has assembled an incredible management team. He's done a fantastic job. Les seems to be more of a driver. He has all the best TV shows in every category. He has a gut about shows. But, in fact, they are both winners. And they both want to win. Their competitive spirits are enormous. I like winners. I need those two guys to win. They have a right to compete with each other in any area of their businesses, as long as they don't do something outside the law that puts the other one out of business. So yes. And there's nothing wrong with competition.

I used to do all of that in Viacom [before the split]. And it's a new experience for these guys. But they are doing a great job.

First, we think it was very innovative to bring Katie Couric onto the "CBS Evening News." I'm not so much concerned about the evening-news category. I'm concerned about "CBS Evening News." She can certainly revitalize that. However, there's a second thing that people haven't grasped. To the extent we have hurt [NBC's] morning-news show, we help our morning show.

I think it's awful. I think that the government absolutely should not determine what Americans see and hear. And that applies to this recent attack on "Without a Trace." All it purported to do was to warn parents to keep closer supervision of their children. There was no explicit sex. And yet we were attacked. The bottom line is, the government should stay out of this business. In the months after Howard Stern announced his defection to Sirius Satellite Radio in a reported half-billion dollar deal, but before he left CBS Radio, he seemed to be talking up his future at Sirius. Why wait until February, after he was at the new job, to sue him and seek the $200 million bonus Sirius gave him in stock?

Howard Stern used our airwaves to advertise a competitor. We are supposed to get paid for advertising. We did not. And he was incentivized to do that, as shown by the bonus that he got [from Sirius]. We delayed suing him because we do not lightly enter into litigation. But now that we have, we are determined to see it through. We're suing not only for what he did on the airwaves, but for the bonus that he got as a result of misusing our airwaves. We are pretty confident of winning. And if you don't believe me, ask Les.

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