The Redstones: A Family Feud for the Ages

Sumner Redstone is cranky. He's having a huge falling-out with his daughter, Shari—once considered the 84-year-old mogul's heir apparent—and it looks as if she may leave the family media empire, which controls Viacom and CBS. And the split with Shari, 53, is hardly the only conflict Sumner has had lately. His son, Brent, wiped his hands of the family business this spring after suing his dad and sister for allegedly freezing him out—settling for as much as $250 million, people familiar with the matter say. Sumner's battling a multibillion-dollar lawsuit by his nephew, who accuses him of "self-dealing" that deprived the nephew and his late sister of their stake in the Redstone enterprise. Sumner sent Tom Cruise packing from Paramount Studios, and then did the same to Viacom honcho Tom Freston. He's bickering with CBS chief Leslie Moonves over the size of the executive's compensation. And at Herbert Allen's annual mogul fest in bucolic Sun Valley this month, Redstone got into a war of words with CEO Eric Schmidt of Google, which Viacom is suing for more than $1 billion for allegedly nicking programs like "SpongeBob SquarePants" and "The Daily Show" for use on YouTube. Schmidt said Redstone and his cohorts had "built their company on lawsuits." To which Redstone replied, "I hate litigation; I'm a lover, not a fighter."

Right. More lawyers than loved ones surround Redstone these days, as the octogenarian mogul faces many battles. Decades of Redstone family dysfunction have erupted into public blood sport, with inheritors warring over the family fortune. At the same time, Redstone finds himself at a digital crossroads. He built his $8 billion fortune on properties cobbled together in an analog age—the National Amusements theater chain, MTV and Showtime, Paramount Pictures, CBS. But now digital upstarts like YouTube, MySpace and Apple are luring the viewers away from Redstone's properties, and morale is sinking at Viacom and his other companies. While his rival Rupert Murdoch is busy empire-building—negotiating a purchase of Dow Jones & Co., launching a new cable business channel and snapping up MySpace—Redstone is hunkered down, trying to protect a kingdom seemingly under siege from both inside and out.

So it is that Sumner Murray Redstone—the Harvard-trained lawyer and U.S. Department of Justice alum who says he hates litigation—has dispatched his lawyers to fight his battles. But then, Redstone and his kin have long preferred litigation over other means of conflict resolution. For more than three decades, Redstone siblings have been suing siblings, and children have been suing parents. And in the wake of all this litigation is an ever-growing paper trail of briefs and depositions, filling out an unflattering portrait of Redstone at a time when he'd no doubt prefer cementing his legacy as a media visionary. They paint a picture of a man who's methodically and craftily put fortune before family—and is now left with nothing but gold.

That's certainly the way Michael David Redstone, 50, sees his uncle Sumner. In the fall of 2001, Michael sent a handwritten plea to the billionaire. Michael had suffered "huge losses" in the market and needed to dig deeply into the principal of his trust fund, he wrote. Private-school tuition for his two kids was crushing him, and he feared he couldn't support them. Would Redstone put some stock of the family company, National Amusements, in his name to tide him over? "I am close enough to you to make this request," Michael wrote. Not close enough, apparently. "Sorry. Impossible. Stock cannot be transferred," Redstone scribbled across the bottom of Michael's letter (a copy of which was obtained by NEWSWEEK), and returned it via express mail four days later.

In letter after letter over the years, Michael has poignantly expressed the state of Redstone family affairs. Revealed as part of his 2006 lawsuit against his uncle, the letters allude to "psychotic fights" and "tragedy after tragedy" in the Redstone clan. Michael accuses his own father, Edward, of joining his uncle to cheat him and his late sister out of shares of National Amusements. Redstone has labeled the lawsuit "baseless," saying his nephew had superb advisers and had begged to be bought out. He is seeking to have the case dismissed, citing the statute of limitations.

The seeds for all this family turmoil were planted in 1959, when Sumner's father, a onetime linoleum peddler in Boston named Michael (Mickey) Redstone (he reportedly changed his name from Rothstein in 1940 partly to avoid being wrongly connected with Arnold Rothstein, the New York gangster who fixed the 1919 World Series), split up the shares in the movie-theater company he'd built from a single drive-in. By that time, both Mickey's sons, Sumner and Edward, were working for his theater chain, National Amusements Inc. Sumner had graduated near the top of his class from the famed Boston Latin School, Harvard College and, in 1947, Harvard Law School. Just days after taking the bar exam, he married Phyllis Raphael, whom he'd met years earlier at a temple dance. In 1954, he had left his $100,000-a-year lawyer's salary to take a $5,000-a-year job with his father.

Mickey issued 300 shares—100 each for himself and his sons—and specified that half of Sumner's and Edward's shares be put in trust for his grandchildren.

Not in his worst nightmare could the family patriarch have imagined the grief that would be caused by his divvying up the family wealth. But Sumner and Edward were already fierce rivals. To hear Sumner tell it, he was the unabashed favorite of his mother. "There was only one number-one and that had to be me. My brother ... was not the target of her passion; I was," Sumner wrote in his 2001 autobiography, "A Passion to Win." Tensions flared in the workplace, especially as Sumner assumed more control. "My father clearly wanted me to run the company ... and be his successor," Sumner wrote in his autobiography. "So essentially I took over."

In 1972, Edward sued Mickey, Sumner and National Amusements, accusing them of "mismanagement" and "wrongdoing," according to court documents—though Sumner now says he doesn't recall any such dispute. Mickey and Sumner settled that same year, paying Edward $5 million to buy him out. That left Sumner the largest stakeholder in National Amusements and in control of various trusts for his and his brother's children. A dozen years later, in 1984, Sumner authorized the buyback of stock from the trusts, and by the time it was all done, he'd doubled his personal ownership in National Amusements to 67 percent. His children, Shari and Brent, held 33 percent. Edward's offspring no longer owned any of the family company. Through a spokesman, Redstone says Edward's son, Michael, had wanted out.

In a 2004 deposition, Edward, who went on to become a successful banker, would recall being under "duress" and signing the 1972 settlement without having read the piles of paperwork—documents that Sumner had personally drafted. "They knew they had me over a barrel," Edward testified, explaining that at the time his wife was suffering from polio and Michael was in the hospital.

Worse still was the plight of Edward's daughter, Ruth. Shortly after enrolling at Brandeis University in Massachusetts in 1972, she joined a sex-oriented religious cult and disappeared. The family found her some years later and hired a deprogrammer, according to The Boston Globe. But Ruth vanished again and didn't resurface until 1987 in Japan—dead, of unclear causes, at 33. It wasn't until then that the family learned she had a 3-year-old son, Gabriel (Adam) Redstone, whom Edward would go on to raise. (Adam died at 20 in 2004 in a motorcycle accident.) Edward's wife also died in 1987, as did Mickey and his wife, Belle.

Although 1987 was a time of family tragedy for the Redstones, it was also the year that Sumner leaped from the ranks of mere multimillionaire to certified mogul. With the battle cry "content is king," he fought a bitter war for Viacom, parent of MTV, eventually winning the company with a $3.5 billion bid. That was followed by his 1994 purchase of Paramount Communications for $10 billion, and the $40 billion merger of Viacom and CBS in 2000. The Viacom-CBS merger affirmed his financial brilliance, and enriched him beyond his dreams—a billionaire eight times over.

In the business pages, Sumner may have been on top, but at home his life was a shambles. His wife, Phyllis, sued him for divorce on three occasions. As luck—or strategy—would have it, the divorce filings each came in the midst of one of Sumner's big deals, raising public concerns about his grip on the company and prompting a temporary reconciliation between the couple. Sumner, the divorce suits alleged, was a philanderer. According to a 2000 Boston Magazine article, he had a longtime affair with one of Phyllis's friends, and it was she whom Sumner was with at Boston's Copley Hotel in 1979 when a fire was set outside their suite, leaving Sumner hanging by a window ledge as the fingers of his right hand burned. Phyllis finally made good on her threats and divorced Sumner in 2000, amid accusations of an affair between him and a Paramount producer. Three years later Sumner married Paula Fortunato, a former schoolteacher half his age.

Sumner's marital woes may have been settled, but soon his other relatives were dragging one another into court. Brother Edward, who now lives in California with his current wife (Sumner's former broker), filed a series of suits over the funds held in trust for his late daughter, Ruth. Then last year Michael filed suit. In reaction, National Amusements said in a statement that Sumner "essentially rescued Michael from a difficult family environment, removed him from a mental institution, paid for his education and gave him a job." An attorney for Michael has confirmed his client was in a mental institution, but denied Redstone freed him.

Meanwhile, Sumner and his own children have reached an impasse from which there seems no return. Last year his son Brent, a former Boston prosecutor who now lives near Denver with his family, sued his father and sister, Shari, claiming among other things that they'd frozen him out of National Amusements and had used the company's assets to settle their respective divorces (Shari was married to a former executive of the theater chain). Brent's suit was settled in March, with National Amusements buying him out.

Then last week a simmering rift exploded between Sumner and Shari, whose personality Viacom insiders say is peppery like her father's. She runs National Amusements and had stuck by him in his battles with her mother and brother. A lawyer, too, with three kids, she'd appeared to be his choice for a successor. But the relationship chilled over the past year. Redstone publicly questioned her strategy for the theater business. Frustrated with her views on succession at CBS and Viacom and the makeup of their boards, he's said to be negotiating her exit from Viacom and a possible buyout of her National Amusements stake. In an open letter sent to Forbes magazine on Friday, Redstone wrote, "If Shari desires to be bought out, I will consider this as long as the price is acceptable." Shari "hopes to resolve this matter privately," a spokeswoman for her said.

It hasn't helped, Redstone execs say, that Shari and Sumner's new wife, Paula, have a frosty relationship. Paula, according to two company execs who don't want to be identified for fear of retribution, has also found fault with Moonves, one of Redstone's top lieutenants, despite a friendship with his wife, CBS newscaster Julie Chen. Paula blamed Moonves, the two execs say, when her relatives were left sitting in stadium seats during a downpour at this year's Super Bowl, which CBS aired, while Moonves enjoyed the game in dry comfort in a luxury skybox.

Viacom's rank-and-filers note that the latest round of family feuding began last year, when Redstone became frustrated with the weak performance of his entertainment empire and began asserting more authority over the company. Last summer he ended Paramount's relationship with Tom Cruise, blasting the star for his increasingly public promotion of Scientology. Not long after, he fired Freston, a widely admired executive, and replaced him with CEO Philippe Dauman, a onetime Viacom vice chairman and Redstone's personal attorney. With Shari's exit apparently looming, the media world has quickly concluded that Dauman will play a decisive role in determining what happens to the family empire when Redstone dies. Why? He's "the son Sumner never had," notes a longtime Redstone associate. Or, more accurately, he's the kin Sumner once had but lost.