Sumner Redstone, the media mogul who controls both CBS Corp. and Viacom Inc., is slated to turn 92 next week. Before that event arrives, however, he is already getting a few things he may not want: heightened scrutiny of his health and questions over the ultimate direction of the media companies guided by his hand.
A flurry of press reports have surfaced in recent weeks suggesting Redstone’s physical health is not robust and raising questions about his relationship with members of his family, who are slated to inherit much of his wealth. He has developed trouble speaking in recent months, and is no longer a vocal presence on the quarterly calls with investors CBS and Viacom regularly hold. In the past, Redstone would take to the phone to introduce CBS CEO Leslie Moonves or Viacom CEO Philippe Dauman with glowing adjectives.
“Despite all the ink and bits expended over the last few weeks, there has been no change in Sumner’s health,” said Carl Folta, a spokesman for Viacom who has often served as a central figure in Redstone’s public outreach. Earlier this month, Redstone issued a statement saying he continued to guide his stakes in both media companies. His shares in both concerns are held through National Amusements, a movie-exhibition company controlled by his family. Redstone’s family trust controls 80% of National Amusements.
Press speculation, likely fueled in part by Wall Street executives who would like to see Viacom or CBS put into play, has intensified about the fate of both companies after his demise.
At CBS’ annual stockholder meeting, held yesterday, Moonves threw cold water on the idea that CBS might take over Viacom. “We have no intention at this point in time or any time in the future to take over anybody,” Moonves said. “We are very satisfied with our assets and our performance. We don’t see anything like that” on the horizon, he said.
There is a plan in place for what happens to that family trust that controls National Amusements upon Redstone’s death. Voting control will be held by seven trustees: Viacom CEO Dauman; George S. Abrams, a Boston attorney who has been a Viacom director for years; David R. Andelman, a Boston attorney who is a director of CBS and National Amusements; Norman I. Jacobs, another attorney who has advised Redstone; Leonard L. Lewin, an attorney with ties to Phyllis Redstone, Sumner Redstone’s ex-wife; and two of Redstone’s heirs, Shari Redstone, his daughter, and Tyler Korff, his grandson. Shari Redstone and Tyler Korff will take over as trustees from Sumner Redstone and Phyllis Redstone, according to a statement from Leah Bishop, Sumner Redstone’s estate attorney.
“Careful planning has been done so that estate taxes at Mr. Redstone’s death will not require a forced sale of assets,” said Bishop’s statement. “Mr. Redstone also owns assets outside of the NA Trust that are the subject of his personal estate plan.” Bishop could not be reached for immediate comment Friday morning.
Redstone’s health is of concern because his death could add another pressure factor on two big media operations at a time when the industry is in tremendous flux. The rise of streaming video and mobile media devices now allows consumers to watch TV programming at times of their own choosing and in ways not always measured in the fashion that gets support from advertisers.
Viacom has been buffeted by ratings declines at well-known cable networks like MTV, Nickelodeon and Comedy Central. The company recently completed a massive restructuring involving dozens of layoffs of senior executives and triggering a charge of $784 million.
CEO Dauman has articulated a strategy of devising agreements with advertisers that are not as dependent upon Nielsen ratings associated with linear TV viewing. Viacom recently indicated it had sold about 30% of its advertising inventory associated with the upfront market, when TV networks try to sell ads for the next cycle of programming, but media buyers have suggested most of those sales are associated with advertisers who have multi-year deals with the company and are not necessarily indicative of current activity.
CBS, meanwhile, has made a series of bold moves into digital distribution. The company recently launched a subscription-video-on-demand product, CBS All Access, that allows customers to view most CBS programming as well as content offered by its stations and affiliates. CBS News has unveiled CBSN, an ad-supported streaming-video news feed. A new broadband-distributed version of the company’s popular Showtime cable network is expected to debut in the months to come. Moonves, the CBS chief executive, has in recent months placed more emphasis on generating revenue from sales of CBS content to streaming-video players and international distributors.