EPISODE 4
“I’m Not Going to Fire Him”
Shari quickly filled the void in Sumner’s Beverly Park mansion. She all but moved to Los Angeles, spending nearly half the next year there. When father and daughter weren’t together, they communicated regularly via FaceTime. Still, Sumner counted the days between her visits. His nurses installed a large clock so he could track the hours and minutes until Shari’s arrival.
Shari became adept at interpreting Sumner’s speech. She hired professionals to oversee his medical care. She and her father watched sports and movies together. But most of all they talked business, once again Sumner’s favorite subject. She kept him informed about everything she knew as a board member and vice chair of both Viacom and CBS.
In trying to sort through her father’s affairs, Bishop proved to be little help. Although she had collaborated closely with Holland and Herzer, and then with just Herzer once Holland was expelled, it infuriated Shari that Bishop now refused to meet alone with her unless Bishop had her lawyer present.
And Dauman had by no means retreated. He was often at Sumner’s mansion, too, watching sports on TV with him and discussing the movie business. Dauman seemed to feel his position was secure. His second-in-command, Tom Dooley, warned him that Herzer’s eviction and Shari’s ascendance put their status in jeopardy, but Dauman just shrugged. “We’ll see,” he said.
Dauman had always filtered everything he told Sumner about Viacom through his point of view, which had typically omitted Shari’s. She now had the opportunity to point out their many areas of tension and disagreement and explain that she was only trying to do what she thought Sumner would have wanted.
But Dauman’s loyalty was still paramount. “I’m not going to fire him,” Sumner insisted.
On November 24, just six weeks after she was ejected from Sumner’s mansion, Herzer filed a lawsuit to reclaim her position as Sumner’s health care proxy. Describing Sumner as “a tragic figure in the waning days of an accomplished life,” she claimed that Sumner now lacked the mental capacity to revoke his earlier health care proxy, signed when Sumner “was lucid and in full possession of his faculties.” And she took a slap at Shari: “His choice was based on a close bond formed over many years that he repeatedly described as a loving familial relationship. Though Mr. Redstone has two adult children and five adult grandchildren,” he had nonetheless chosen Herzer “to care for him in his last years, knowing that he could always trust her to honor his wishes and look out for his best interests.”
Herzer was the first to say publicly what many suspected: ninety-two-year-old Sumner Redstone, still the highly compensated executive chairman of two publicly traded companies, was in fact incapacitated—“a living ghost,” the suit maintained. “Those who know him now describe him as vacant, unable to reliably communicate, unaware of his surroundings, and without interest in things that used to excite and engage him.”
It fell to Shari to break the news of the lawsuit to Sumner. His immediate fear was that Herzer might be reinstated as his health care proxy. He hated Herzer, he reiterated, and became agitated at the prospect she might be coming back into his life. Shari reassured him that would never happen.
Litigation was nothing new for Herzer. In keeping with her pit-bull reputation, she may well have concluded that the best defense was to launch a preemptive strike before Shari could sue her for the return of the lavish gifts. Thanks to Sumner’s generosity, she had the war chest to assemble a formidable legal team and launch a scorched-earth litigation campaign.
After her visit to David Boies with Holland had gone nowhere, Herzer had hired Pierce O’Donnell, one of Los Angeles’s highest-profile lawyers. O’Donnell had gained a national reputation by successfully representing columnist Art Buchwald in a suit claiming that Paramount had stolen his idea for the Eddie Murphy comedy Coming to America. O’Donnell had also handled some high-profile divorce cases, including a recent successful effort to recoup lavish gifts to a mistress.
Sumner had paid O’Donnell’s $250,000 retainer. After Holland was ejected and she and Herzer were at odds, O’Donnell represented only Herzer. Since Sumner was no longer paying her expenses, O’Donnell agreed to represent her on a contingency fee basis, in which he and his firm would take a percentage of any settlement or verdict.
In focusing solely on Herzer’s status as Sumner’s health care proxy rather than on her aborted inheritance, the lawsuit suggested Herzer was on a purely humanitarian mission. Herzer maintained her motive was “to accomplish one single objective: to see that she is able to honor her sacred promise to Mr. Redstone to care for him for the rest of his life.”
But the wording of the lawsuit suggested something less benign than a single-minded devotion to Sumner’s well-being. The petition was merciless in its detail and unsparing of Sumner’s privacy or decorum. It described Sumner as “obsessed with eating steak” despite the feeding tube and said he “does not seem to recall or understand why he cannot do so. Similarly, Mr. Redstone demands, to the extent he can be understood, to engage in sexual activity every day.”
The petition was all but guaranteed to generate sensational media coverage, and it did: “sex-obsessed” sumner redstone kept beautiful women on retainer, trumpeted the New York Post. The New York Times described the lurid personal details included in the petition as “excruciating.”
Herzer’s former ally Holland wanted no part of it. Holland “is absolutely disgusted with what’s going on in court with Manuela,” her lawyer Brad Rose told Fortune magazine.
To succeed, Herzer’s lawsuit also had to thread a factual needle: that Sumner had been fully alert and mentally competent just months earlier, when he made Herzer his sole health care proxy (not to mention the many times he gave her vast sums of money and made her the beneficiary of his trust), but not when he removed her. So Herzer alleged that after Holland was ejected for having the affair with Pilgrim, “it was like a switch had been flipped, and his mental presence and acuity were faint shadows of what they had once been for the once vital, towering figure.”
Herzer offered several declarations in support of the petition, which might have been more persuasive if made by less self-interested and obviously conflicted witnesses: one was from her paid medical expert, and the others were from her brother Carlos and Heidi MacKinney—Herzer’s employee and Sumner’s sometime sex partner.
Redstone’s lawyers issued a press statement portraying Herzer as a ruthless gold digger. Her “claim that she filed this lawsuit out of concern for Mr. Redstone is preposterous,” said Loeb & Loeb partner Vidal, who had witnessed Herzer’s expulsion. “It is a meritless action, riddled with lies, and a despicable invasion of his privacy. It proves only that Ms. Herzer will stop at nothing to pursue her personal financial agenda.”
A spokesperson for Shari said only, “Sumner’s family members now have unfettered access to him. Shari is, and has been, actively involved in Sumner’s care.”
A few weeks later, on December 11, Sumner sent a letter to Shari, in care of Bishop, that repudiated his former relationship with Herzer and sought to erase her recent presence: “I wish to put our family back as we were before Sydney and Manuela, and restore our family relationship to what it was then,” the letter read. “This is very important to me. I love and trust you and your family. You are all invited to stay with me and visit me any time. I am very sorry to hear that others have excluded you and your family from my house. That will never happen again.”
For good measure, he stressed that previous documents and statements that criticized Shari or members of her family “should be considered withdrawn, terminated, voided, cancelled, inaccurate and of no effect whatsoever.” And he asserted that he was under no duress or coercion while composing and signing the letter, an event witnessed by Jagiello. By now Sumner’s signature was little more than a sloping line.
With Herzer banished and Shari and her family back in her father’s good graces, the 2015 Christmas holidays bore little resemblance to the previous year’s, when Herzer’s and Holland’s extended families had taken over the house. Shari, her children, and two great-grandchildren spent the holidays with him, playing games and, in Shari’s case, discussing the media business.
Dauman soon turned against Herzer and tried to placate Shari by agreeing to testify against her. In a pretrial deposition he said he’d met with Sumner “several times a week by telephone regarding both business and personal matters” and had found Sumner “to be engaged and attentive” when he visited him as recently as November 3. “Sumner asked me to send regards to various people, and I updated him on the regards others have asked me to pass along to him,” Dauman testified. “We talked about the conference at which I would be speaking the following morning, and we reminisced about corporate history and personal matters.” Dauman also said that when he met with Sumner on October 8, the same meeting Herzer had characterized as “a monologue,” he and Sumner “had an extensive business discussion regarding articles that appeared recently.” On both occasions, Sumner “was engaged, attentive and opinionated as ever.”
Dauman added that he cared “deeply for Sumner and will do whatever is necessary to ensure that he continues to receive superior care.”
Still, the implications of Herzer’s departure and Shari’s return weren’t lost on Dauman. In January he quietly hired lawyers at the prominent firm of Paul, Weiss, Rifkind, Wharton & Garrison to explore his options.
Herzer’s lawsuit, with its devastating assertions about Sumner’s physical and mental decline, coupled with his conspicuous absences at recent shareholder meetings and presentations—not to mention the millions CBS and Viacom were still paying Sumner—caught the attention of Wall Street. With a controlling shareholder like Sumner, activist investors had shown little interest in Viacom. In the wake of the lawsuit, that changed. Even Sumner’s handpicked directors had a fiduciary duty to all shareholders.
At an investor conference in December hosted by Reuters, the influential media investor and major Viacom shareholder Mario Gabelli asked about Sumner, “Is he or isn’t he in the position where he should be chairman emeritus or something?” Salvatore Muoio, another major Viacom shareholder, echoed the sentiment: “If Sumner is no longer fit to lead the board, then he should give up that role.”
Eric Jackson, managing director of SpringOwl Asset Management, an activist investor with a stake in Viacom, attracted widespread publicity in January after he posted on the internet a slideshow with a devastating critique of Viacom’s leadership. Jackson called Viacom “creatively bankrupt.” He compared the situation with Sumner to Weekend at Bernie’s, a comedy in which two young executives prop up their dead boss so they can enjoy a weekend at his Hamptons estate.
The numbers alone were devastating: Viacom stock had lost 46.9 percent in the previous year, compared with a decline of just 1.2 percent in the S&P 500 stock index. Over the past three years Viacom had lost 21.4 percent, compared with a gain of 47.1 percent by the S&P 500. CBS had gained 34.5 percent over the same period, and Disney had more than doubled. It seemed inconceivable that the once-stock-obsessed Sumner would have tolerated such dismal performance, had he been cognizant of it.
Jackson criticized Sumner as an “absent chair,” faulted the lack of succession planning, and bluntly called for “a new chair, CEO, COO and board.” He noted that despite Viacom’s abysmal performance, Dauman and his chief operating officer, Dooley, had been paid a total of $432 million over the previous five years, “far ahead of any other media company” (with the exception of Moonves at CBS, who was paid even more, but CBS stock had soared). Jackson concluded: “Viacom management has underperformed for years with no accountability.”
A shareholder lawsuit in Delaware soon followed, accusing Viacom directors of breaching their duties to shareholders.
Viacom directors dug in. “Mr. Redstone’s physicians have publicly attested that he is mentally capable, and this information is consistent with other medical and other information available to me,” William Schwartz, a lawyer and chair of Viacom’s governance and nominating committee and a longtime friend of Sumner’s, said in a statement. But there was no mention of any actual meeting or interaction between Sumner and Schwartz, and the odd wording—“consistent with”—only fueled more speculation about Sumner’s condition.
All of this was followed with intense interest at CBS, where it was perfectly obvious that Sumner was in no mental or physical condition to serve as board chair or, more fundamentally, as a controlling shareholder. He hadn’t appeared at either Viacom’s annual meeting of shareholders in March or CBS’s in May. Thanks to Moonves’s leadership, CBS shares had fared far better than Viacom’s, and CBS had escaped the scrutiny and scathing criticism heaped on Dauman at Viacom. (With Herzer banished, Sumner had also stopped meddling in CBS casting decisions. Madam Secretary was canceled in 2019 after six seasons, and Kathrine Herzer didn’t get another role at CBS.)
Nonetheless, CBS could as easily find itself at the whim of whoever managed to gain sway over an incapacitated Sumner, which at the moment seemed to be Shari.
Moonves had no intention of letting that happen. In December, the independent directors on the CBS board, without telling Shari or Sumner, formed a special committee to investigate eliminating Sumner’s controlling interest. Options included having CBS buy National Amusements’ controlling shares at a premium, and a more drastic route: to issue a dividend consisting of a fraction of supervoting shares to all shareholders, which would have the effect of diluting National Amusements’ voting power.
Moonves’s second-in-command, CBS chief operating officer Joseph Ianniello, warned Moonves in an email that such a drastic step would “take away Ms. Redstone’s whole life.” But there was no doubt where Ianniello’s loyalty lay. If Moonves ever went to war with the Redstones, “I will have your back to the end,” Ianniello told him.