The Talented Ms. Redstone
There are some things only a daughter can know. Consider the telephone call Shari E. Redstone received from her father last August. Sumner M. Redstone, CEO and controlling shareholder of Viacom Inc., had just been approached by Mel A. Karmazin, the head of CBS Corp., who offered to sell the broadcasting giant to Viacom. "Dad, this is a done deal, isn't it?" Shari asked. "No, we're just looking at it," he replied. "No," she shot back. "I can hear it in your voice." Sure enough, barely two weeks later, the $40 billion acquisition was announced--a whopper of a deal, even by Sumner Redstone's standards.
As part of the merger, Karmazin, 56, is set to become president of Viacom with much control over management with the deal's expected close in April. Redstone, 76, will remain chairman and CEO, but his two longtime deputies will resign. That adds up to a plan for Viacom, though family-controlled, to be run by outsiders for the forseeable future. With annual revenue of $20 billion and assets including Paramount Communications' movie and TV studios, cable channels MTV and Nickelodeon, publisher Simon & Schuster Inc., the most-watched broadcast TV network, and the country's second-biggest radio group, it certainly is a hefty task.
But quietly--and surprisingly--Shari Redstone is emerging from the shadows at Viacom's much smaller parent company, poised to play a key role both in the entertainment industry and in the world's third-biggest media conglomerate. A onetime criminal defense attorney, Redstone, 45, has been on Viacom's board since 1994 and has been sitting in on its executive committee, roles she'll continue after the merger. And in December, she was made president of National Amusements Inc., the private movie-theater chain through which the Redstone family holds its 66% voting interest in Viacom, valued at about $11 billion. "This isn't my job--this is my life," she says. "I love being the parent company."
ROUGH PATCH. At National, her day-to-day task is to guide a theater chain with some 1,400 screens and more than $500 million in revenues through the toughest patch in the industry's recent memory. That means spending to refurbish theaters at a time of rising interest rates to ensure that moviegoing can compete with the explosion of entertainment choices online and off. Certainly her father has no doubts she will succeed. "She is relentless," he says. "Frankly, I like to think of Shari as my clone." Not quite a clone, says Karmazin. "She seems to me to be as smart as her father," he says, "and a lot better-looking."
Certainly the driven, outspoken Bostonian whose accent makes "partner" sound like "pahtner" does evoke her father when describing her work last month at an industry convention in Las Vegas. There, she sealed two Internet deals for National; in one, the chain bought a 33% stake in movietickets.com, and 75% of the other, a Web-based venture for theaters she says is too hush-hush to talk about. "I slept 11 hours in four days--a new record," she says. "Sleep is something you can eventually get to, but a missed deal is lost forever."
It might seem that if National Amusements misses a few deals, it's little skin off the Redstones' backs. After all, what other theater chain has a controlling stake in a media colossus on its balance sheet? But Redstone's quiet ascension comes amid deep changes in the empire and its controlling family. Not only is it a question mark how well the CBS and Viacom cultures--and personalities at the top--will mesh, but in December, her mother, Phyllis, filed for divorce from Sumner after 53 years of marriage. ("Life happens," is all Redstone says.)
NO BUSINESS LIKE... Meanwhile, Shari's brother, Brent, 49, a former assistant district attorney in Suffolk County, Mass., recently began working at Viacom's Showtime Networks Div. in what his father calls a "learning stage." One family intimate says Brent, who spent the past several years at a law firm in Colorado and has been on Viacom's board since 1991, is "more laid back" than his sister. "I believe in having a professional management team," says Sumner Redstone. "Is it possible my kids may play a larger role at Viacom? Yes. Of course, I never ruled out any possibilities in my own life."
After all, it was only 13 years ago when Redstone went from the obscurity of running National, which his father founded, to buying Viacom Inc. He followed that up in 1994 with deals for Paramount and Blockbuster. During the heated takeover battle for Paramount, Shari was a fixture by her father's side, having recently joined Viacom's board.
Although she had practiced as a lawyer like her father and brother, Redstone spent several years raising her three children. By 1994, she was ending her marriage to Rabbi Ira Korff, who had served as National's president since 1987 and is now the publisher of the Jewish Advocate newspaper. Sumner suggested she work part-time at National's headquarters--built on the site of one of its former drive-ins in a Boston suburb. Although she was then studying for a master's degree in social work, Redstone quickly discovered showbiz was in the blood.
Soon she was at National full-time, pushing forward renovations of existing theaters to add stadium seating and extra concessions. She has also spearheaded plans to expand into Britain, Chile, and Argentina. Typical of her influence, a multiplex in Randolph, Mass., today offers "Reel Kool" kids' birthday parties ($15 a person for a ticket, snacks, Happy Birthday sung by the ushers, and a chance for the guest of honor to turn the projector on to start the film) and even free wine tastings on certain nights. It's part of what she calls "programming" to keep people coming back. Redstone also wants to organize forums for families when controversial sexual or violent fare is run. "She's a team player and a student of this industry who gets better at [it] every day," says Lawrence J. Ruisi, president and chief executive of rival chain Loews Cineplex Entertainment Inc.
EMPTY SEATS. So far, though, her best efforts haven't protected National from an industrywide slump. Mostly, those woes have been caused by overbuilding of multiplexes by rivals, leading to too many empty seats and little leverage over Hollywood to cut a better deal. Although she won't disclose National's earnings, she was "depressed for three days" by National's yearend performance.
Redstone is now betting that movie theaters will have a bright future in three or five years. She recently explained this to Karmazin, who has also been sitting in on high-level meetings at Viacom. "It doesn't sound like a very good investment," she recalls Karmazin saying. Her response: "Mel, if you don't spend the money, it's over." And clearly, Ms. Redstone is just getting started.