Motley Fool Money - Paramount: The House of Redstone

Episode Date: March 5, 2023

It’s one thing to hear that money doesn’t buy happiness. It's another to find that out after wiring $90 million dollars to two separate romantic partners in one afternoon. James B. Stewart and Rachel Abrams are the co-authors of “Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy.” They joined Catie Peiper to discuss: - How billionaires try to bend reality - If Paramount chair Shari Redstone can innovate in a new media landscape - Problems with CEO succession at media companies Companies discussed: PARA, DIS Host: Catie Peiper Guests: James B. Stewart, Rachel Stewart Producer: Ricky Mulvey Engineer: Tim Sparks Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, I'm Charlie Cox. Join us on Disney Plus as we talk with the cast and crew of Marvel Television's Daredevil Born Again. What haven't you gotten to do as Daredevil? Being the Avengers. Charlie and Vincent came to play. I get emotional when I think about it. One of the great finale of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh boy. Fantastic. You guys go hard. Daredevil Born Again official podcast Tuesdays and stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. In terms of her business judgment in a Qman, I think it's fair to say that we do know. I mean, she was pushing to merge the Viacom and the CVS companies into one larger company. And I think she's pretty much been vindicated on that.

There's no question today with the rise of the giant streaming services that, you know, size and scale in the entertainment industry now counts for more than it probably ever has in the past. I'm Chris Hill, and that's James B. Stewart, a Pulitzer Prize-winning columnist at the New York Times and co-author of the new book, Unscripted, The Epic Battle for a Media Empire and the Redstone Family Legacy. Warren Buffett made a clear bet on this company's future. Berkshire Hathaway owns 91 million shares of Paramount Global, the resulting media empire at the center of this book. My colleague Katie Piper caught up with Stewart and co-author Rachel Abrams to talk about

the challenges facing Paramount Global's current chair, Sherry Redstone, and stories involving the media conglomerates founder, who just happens to be her father, Sumner Redstone, like the time he fired Tom Cruise after a bad interview. So there are so many riveting threads from your book that I could highlight for our audience. I was absolutely gripped while I was reading through it. There's Made for Reality TV Dramna of Sumner Redstone's romantic affairs to the behind the scenes, politics of CBS and Viacom's boardrooms, politics that as a consumer, I realized, affected all of us. But yet, the thing that struck me most was just the tragic figure of Redstone at the end of his life. Here's this billionaire mogul who built this vast empire and was often

fairly brazen in his attitude. And yet, you guys kept relating these stories of him crying and his estrangement from his family, not to start us off with such a hot, topic, but what would you guys say he regretted most towards the end of his life? Well, certainly, I mean, one of the things that it was like, it was really interesting to experience while working on this book is here's a guy who just has such atrocious behavior. He's abusive to his daughter. He's horrible to women. He's horrible to people that he works with. His son doesn't even talk to him after they become estranged. And yet at the end of his life, it's hard, you know, he's not the man he was when he was, you know, committed.

all this bad behavior. He is kind of more of a shell of himself. And there are moments where you kind of have, you feel sorry for him because he's not the same person. But you also have to remind yourself that this, that this man is not, you know, it's done so many things that I think somebody would say are not really, do not make him deserving of sympathy. What he regretted most, I mean, he never articulated regretting anything, I don't think. I think that was sort of part of his personal brand. But certainly at the end of his life, he reconciles with his daughter, whom he had really chastised publicly and insulted and called names. So I guess one might wonder, did he ever regret any of that?

I mean, possibly. I think there's one simple moral of this story. If you need a vivid example, which is money and especially great wealth, does not buy happiness or peace of mind. I guess, you know, for those who may not be as familiar, you go into great detail, but could you explain sort of the interplay between CBS and Viacomicon? and how Redstone intersected those two? Yeah, well, those two companies have now been merged into what's called Paramount Global. And certainly at his peak, Sumner Redstone was one of the towering media and entertainment figures of the last century.

He was immensely wealthy, a billionaire many times over. And, you know, these companies shaped what America and much of the world consumed in terms of entertainment and media, including news at CBS. So these were the, you know, the CBS, tech. television network, CBS News Division. Viacom was an umbrella that included the Paramount movie studio. That was the crown jewel in Sumner's Empire, as well as many very popular cable channels, MTV, Nickelodeon, Cartoon Network, Comedy Central. And one of the fascinating things to us about the story is that you see the personal affairs of these characters spilling over dramatically into the business affairs.

these, even though they were controlled by the Redstone family and by Sumner's Trusts, these are major publicly traded companies with thousands of employees and shareholders. And Les Moonvez is in there right in the thick of it, too, which, you know, Rachel, I know you did a lot of reporting on the, during the rise of Me Too around that specifically. Yes. I mean, Jim and I got together because we were doing reporting on Les Moonvest for the times. he and I hadn't even I don't think we even knew each other before that actually. But Jim and I collaborated on a story about how Moonbess's attempts to keep a woman silent, you know, at the height of Me Too when he's seeing all these other men being felled by accusations,

Moonbess's attempts to keep one specific woman silent is what ultimately got him ousted from CBS. And so, and I had, as you mentioned, I've been doing a lot of Me Too reporting, but that was really the story in particular that inspired the book. And Jim and I both got tips relating to how Moonbis was. was basically trying to keep this woman quiet. And we were told to collaborate. And we did the story about that that ultimately, you know, Jim and I both thought, wow, this like, there's just so much here that could be more than just one New York Times story.

I think it's worth mentioning that Les Munez at his peak was a towering figure in media and entertainment in his own right. I mean, the Hollywood reporter named him the single most important person, was powerful person in the entertainment industry. And he, you know, was famous for having. brought CBS from last place to first place in the ratings, he had this so-called golden gut that he knew a hit show when it came. And he was much revered and admired, including by Sherry Redstone, who he ultimately betrayed and turned against, until these really pretty

awful Me Too allegations surfaced. I was actually going to ask this later, but I'll ask this now since we've brought it up. But we've recently seen with another company, this prodigal CEO return to the fold. And I guess my question is, after having gone through all of your research and work, do you see maybe a similar narrative potentially on the horizon for Les Moon Vez and CBS? Well, I'm very familiar with Disney. I wrote an earlier book about that, too. You know, I think the issue of succession, which of course brings up the very popular HBO series

to which many people have compared this story. More specifically, Succession, when you have a very powerful long-serving CEO, not just Disney, that there's been Salesforce and Starbucks and McDonald's, other issues. There is a drama there, a Shakespearean drama in all these cases. I do think I would not directly compare Disney to Paramount Sumner Residence situation, largely because Disney does not have a controlling shareholder. That made a big difference in what was going on in the Paramount Global Empire. And there's a lot more allegations of impropriety in the Paramount situation.

But what makes these things, I think, in some way similar and common, is that when you're talking about the chief executive of a multi-billion dollar corporation, especially one that has so much influence over American culture, like a Disney or a Paramount, you're going to have a fight over that. I mean, the money is off the chart. The power is off the chart. There's glamour. There are, you know, celebrities hanging around.

Many people aspire to that. And once they have it, they have trouble giving it up. I mean, Sunday Redstone kept insisting he was going to live forever. And he came to Hollywood as a mogul, really, only when he was in his 70s. And he was still going strong until it began to decline in his 90s. You know, this just brings me to probably my favorite character, if we were to translate this to a television series like Succession is Sherry Redstone. When I was reading all of these narratives, she often became the most sympathetic person in and out of the boardroom. And I guess my question is, is now that sort of this carnage of this corporate civil war is starting to settle, do we see that?

her as being sort of an innovative corporate leader moving forward in the same image as her father. I love that you pointed out that she's your favorite character because some of the feedback I've been getting from friends reading the book is there's nobody to root for in this book. She's the only one that you can root for. Is she going to be an innovative corporate leader? I mean, time will tell. Jim, I'd actually be curious to hear your thoughts about on that second part of the question. Yeah, I mean, I think Sherry is a sympathetic character.

And again, you know, the book has been compared to the television series. But one of the things in the television series, people have said, oh, there's nobody to root for here. But I think in this book, yes, you know, you can root for Sherry for good reason. I mean, at least she shows a monocum of common sense. She, you know, has some self-awareness. I mean, the outrageous behavior that's going on around her is pretty remarkable. So, yeah, I think she is a sympathetic character. In terms of her business judgment in a human, I think it's fair to say that we do know.

I mean, she was pushing to merge the Viacom and the CVS companies into one larger company. And I think she's pretty much been vindicated on that. There was no question today with the rise of the giant streaming services that, you know, size and scale in the entertainment industry now counts for more than it probably ever has in the past. And even now, people think Paramount is too small to compete long term with a Disney Plus, Netflix, Amazon, on these multi-billion dollar, very deep-pocketed companies. But there's no question that it's stronger together than they were when they were separate. Well, ultimately what's going to happen?

And again, I think most people on Wall Street feel it's not big enough, and it will probably have to merge with somebody one of these days. And I think Sherry Redstone herself wouldn't stand in the way. If she got a good offer from a reputable company, you know, she wouldn't oppose consolidation. But she doesn't want to fire a sale price and she doesn't want to have a gun to her head. Building off of that, do you have the sense at the end of this narrative that you've woven together for us that she has been able to shake off the image that her father and Les Moonvez and the other board members kind of cast for her early on and has been able to make her own sort of image in her own way? Or is she always going to be operating under that reputation? I mean, it's hard to think that she's totally going to escape the shadow of her father who was such a large and looming figure. But she is certainly not him.

And the old guard is no longer there. And she has expressed a commitment to changing the culture. Now, obviously, it is very hard to change a corporate culture. It's certainly a corporate culture at a corporation as big as paramount. And I think one thing we've seen in the past few years of the Me Too movement that's been really clear is that companies have gotten really good at sort of damage control and making a manicured. public statement, they've gotten less good at actually rooting out systemic problems. But all it, you know, as far as we can tell, she's certainly committing to it not being her father's company. And by the way, I think that that was really evident when she first started hearing rumors about

Les Moonbess and his possible behavior toward women. She brings it up with the board. You know, she pushes for a real investigation. And what ends up happening, as we have said, you know, countless times over is a total farce. You know, the board of directors, they hire an outside lawyer. And essentially what they do is just ask Les Moonbiz, hey, did you ever do anything wrong with women? And when he says, no, they say, great, you know, basically thanks for your time. And Sherry finds us totally unacceptable. And so I guess all to say is that she, it's not just that, you know, Les Moonbiz gets kicked out and she, you know, pays a lot of lip service to changing the company. She was trying to push for the right things back when he was still in power. And I think that does say a lot.

I think she's also matured, even in the years we've been working on this book. You know, there's a scene where she early on goes to the big mogul conference at Sun Valley. And like there's Jeff Beezos there and there's Bill Gates and there's, you know, these titans of the business are roaming around. And she's there by herself for the first time. And I, you know, I think understandably she was very intimidated and felt, you know, insecure. How am I going to like hold my own with people like that? And I think over the years, she's gained a lot of self-confidence, greater maturity. She's more articulate.

She's comfortable addressing the public constituencies of big corporations like this. And so she really has made a lot of progress, including the fact that when she started in this way, she's drawn into the story earlier in our book. She didn't want she didn't want to be caught up in her father's business. She'd been there. She'd been burned. She'd been humiliated by him. She didn't want to go back.

But she had no choice given the, you know, the people. who are praying on him in her absence. So she gradually comes back in. And then I think as she did become more involved and did gain certain influence over the companies. And now she's vice chairman of Paramount Global. She likes it. And like many people who get a taste of that,

it's interesting. And you're at the center of like some of the most important cultural movements that are going on in the world and the country today. So I think she really has grown and matured in her role. over the years. That's definitely something I noticed in the threads that you were weaving is she was reluctant. She continued to be reluctant, but it seemed that she settled more into the mantle of it in the later days. But James, I think you mentioned something very interesting is that she was drawn in and part because she felt like her father was really kind of being preyed on by people

both in the boardroom and at his home. I'm wondering if you could maybe paint a picture. We've talked a bit about the boardroom, but what was going on at? his home during this period as well. Well, you know, so here we have Sondra Redstone. He's a mogul. He's a multi-billionaire. He's in his 90s. He's alienated his own family through his bad behavior. And he's surrounded by people.

You would think we would be there to protect him. But in fact, we're in many cases interested in separating him from all or part of his fortune and his power. And none more prominently than first a woman who became his supposedly his fiancé. I mean, he gave her a nine-carat diamond ring, so I guess you could say they were, although they never married. She moved into the mansion. She was his sort of living girlfriend. And then he had another ex-girlfriend who moved in, too. So he had two women living in there with him, who slowly but surely insinuated themselves, first into his love life, then into his house, then into his will, then into his trust funds. And we've showed the scene in one afternoon. They managed to isolate him from everyone.

And he wired in one afternoon $90 million, so that $45 million each. They ultimately walked out of there with over $150 million. But they were slowly but surely taking over his life and came very close to taking over the company. Something I don't think most people realize when it was, Sumner who was in the hospital, he was in the emergency room, and he was in serious shape. one of the nurses who'd been carrying from her at the house, when Sherry came to see him, pulled her aside and said, you should know what's going on here.

And he started emailing her. And she started getting reports of how he was being treated inside the house. And though they were very painful, they were so painful, she told him not to send anymore to send him to her son because she couldn't bear to read them. But that's when she realized that she couldn't just isolate herself and sit by while the family legacy and fortunes and everything are, father who worked for got siphoned away by these people praying on him. And it wasn't just the

women. It's like other executives, advisors, lawyers. It's a very instructive tale. You know, there were suits alleging it was elder abuse. I think of something many people in aging parents, especially if they have some resources, can relate to the efforts of many people to take advantage of wealthy people in their declining years. Yeah, that really spoke to me a lot. And again, as you mentioned at the very top of this, he's not the most sympathetic figures through a lot of his career. But when he starts falling prey to some of these other manipulators, you just can't help but feel sorry for him. My follow up to that is there was this very interesting interplay between sometimes they had to make the arguments that Redstone was very competent, that he was able to make his own business decisions when it came to the boardroom. But then at the same time, there were these very interesting legal suits where they were trying to retrieve that money that he had given away.

And I'm curious sort of like if there are lessons that you would take about how we have to treat these very interesting financial dealings. Well, I think that, you know, the law treats mental competency as very black and white. You're either competent or incapable of making your own decisions or you're not. and anyone that's had to take care of a loved one who is starting to get older and maybe can't totally care from themselves, understands that there's a lot of gray area there. I really feel like people will be able to relate to that aspect of the story in the sense that, like, you want someone that you love to be autonomous and to live a dignified life, but you also don't want them to get behind the wheel of a car and kill themselves or kill somebody else. And I think what

you see in this story is that if it suited people to argue that Sumner Redstone was incompetent, that's what they argued. And if it suited people to argue that he was competent, that's what they argued. And it kind of goes back to one thing Jim and I have remarked a lot about over the course of this book is one of the big takeaways is who do you surround yourself with at the end of your life. And as corny as it sounds, this book is really about, you know, the friends and relationships and people that you have and not, you know, if there's ever a story, money cannot buy happiness, I can't say that enough. I probably already said it in this interview. But if money cannot buy happiness and this really embodies that. And not only did they say if it was in their interest that he was competent, if that situation changed, they just turned on a dime and said, oh, yeah, I know three weeks ago I said he was, you know, perfectly lucid and competent, but now he's completely incompetent. I mean, they just shamelessly shifted their position to frankly line their own pocketbooks. And I think you're touching on a very important issue here in the theme. And something I'd like to see the bars, you know, the legal profession. take up this issue because the system isn't working. This like black and white thing, as Rachel describes it, is too legalistic. It's not the real world. We got a confidential, thorough psychiatric evaluation of Sumner, Redstone. And we report a lot of that in the book. And to have known what Sumner was like at his peak, when he could, he learned Japanese in no time. He cracked the Japanese codes in World War II. He graduated from Harvard in three years.

whatever else you want to say about and he had a brilliant mind. By the time he was in his 90s, he was fading. He couldn't perform simple tests. You read that and you realize why he would have been so vulnerable. And in fact, whether you want to call it legally competent or not competent, he was vulnerable. And you see that play out. It doesn't matter what the law said he was being taken advantage of. I think that's a really interesting dichotomy between this question of his competency later in life.

when there are earlier reports of him doing irrational things when people would have argued he was very competent. The anecdote you related of him removing Tom Cruise off of Paramount because his girlfriend didn't like how he was jumping on the sofa on his famous Oprah interview. I think I would like to say as a rational human being, I'm not certain that that checks the rational box. And so I think it's very interesting how these irrational decisions earlier in life are just brushed aside. as the whims of corporate leaders, but then when it's convenient later in life, suddenly we had that legal debate. Did you see a similar trend? Sorry, go ahead. I think your point is something that is an important issue here, that when you see someone like Sumner-Readstone who is so rich and he has so many hangers on telling him what he wants to hear, people, people, don't recognize normal boundaries.

You know, the things that would give other people pause, he just went right ahead and did, whether that was putting a girlfriend on T-Ey, TV, whether that, there was a small anecdote that sticks in my mind where he had called a reporter and, you know, tried to get him to reveal a source. And the reporter recorded the conversation, wrote about it. And his PR person came in and said, Sumner, what are you doing here? Why did you do that? And somebody said, no, I never did that. I never said any of that. And the PR said, Sumner, it's on tape. He has it on tape. And then someone says, well, then just deal with it. Get rid of it. Do something. You know, he just bends the reality to whatever he wanted it to be in the moment. Now, I think we all know some other people

like that in positions of power and prominence, but he is a very vivid example of that. And that is when he was at his peak. You know, I think that's a really good point about people in positions of power because it seems like throughout all of these narratives, we have people who ended up kind of getting their comeuppance at the end, whether it was Redstone or MoonVez. And then others, like Redstones live in girlfriends who seem to have gotten away without any. repercussions. Yeah, they, I mean, they made up with at least $150 million total. By the way, $45 million was wired to each of them in one day, $90 million total. And, you know, as we detail in the book, there are institutions that are all too happy to take their money and have them sit on

their boards and have them, you know, and fawn them, fawn at them as philanthropists. And it does not seem that any of these institutions to which, like, Sydney Holland has donated money in the aftermath of all of this, has been at all interested in inquiring, you know, what exactly went down at the House of Redstone. Nobody seems particularly interested in whether these women were abusive to him. It just goes to show you that really money can buy a lot, including forgiveness and memory. But not happiness, as we talked about her. Not happiness. Everybody needs to remember, not happiness. You know, going back, to the boardroom dealings. I do have one question for you. We saw recently that Paramount released a

630 million dividend and it's not something that a lot of the other streamers are doing. Disney's not doing it. Warner Brothers isn't doing it. Do you think that with some of these larger personalities out of the boardroom now, with the new members that Sherry has brought in, are they, do they have more skin in the game? Are they being more conservative with their program? I mean, and business choices now, then maybe they would have under a mogul CEO like they did in the past. I look, I don't know every single program that they're producing, but I would say that in contrast to say the Murdoch empire, which is closely identified with Fox News, the Redstone family has never been overtly political or tried to push any kind of agenda like that.

I mean, Sumner had some troubling political views, to put it mildly, which emerged in the book. But they didn't necessarily at all show up in the programming. What Sumner wanted to do was win. He wanted to be number one in the ratings. He wanted to make money. He wanted to track big audiences. And I think that was what really motivated him. Now, today, in a company like Paramount Global and many others, by the way, that are controlled

by a shareholder who doesn't own a majority of the actual shares, you're going to have tension between the regular shareholders and somebody who has voting control. and maybe has a much more sizable stake. And one of those tensions might be, how do you deploy cash? Do you invest it more in the business? Do you provide more dividends? When you have very large shareholders who need an income stream, and this isn't necessarily true in the Redstone case,

but their interests are going to be different from the average person who just owns a few hundred shares. So, you know, there's constant debate about that in corporate governance circles, But, you know, the simple answer is when shareholders buy these companies, they know that there is a controlling shareholder and that these tensions may surface or they should know. When you said conservative, I thought, I was immediately thought that you meant conservative just in terms of like content, not politically. And I was going to say, there's literally a show on TV called Milf Manor, which was a premise for a show, a joke show on 30 Rock. It was like a fake show that is now actually on TV. They just did a Jersey Shore reunion.

So I was going to say that I think it's more of like a race to the bottom. So I'm giving you two answers, one of which you didn't actually. No, that's good because I actually did mean both. So I appreciate that. Well, this has been great. And I really appreciate you guys talking with us today. Again, we've been talking to James Stewart and Rachel Abrams about their new book unscripted. And thank you guys for joining us again.

Thank you so much. Thanks. Pleasure. As always, people on the program may have interest in the stuff. stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.