Vanity Fair - Sumner Redstone, Sleeping With the Fishes

8/11/2019 Vanity Fair - Sumner Redstone, Sleeping With the Fishes

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December 2006

The New Establishment

Sleeping with the FishesHappy at last, Sumner Redstone is still far from mellowwitness his public trashing of superstarTom Cruise and firing of Viacom C.E.O. Tom Freston. At home in Beverly Hills, the 83-year-old tycoon and his new wife, Paula, reveal their love story, her role in the Cruise decision, andwhat he claims was Freston's big mistake.byBryan Burrough

Sumner Redstoneand one of the saltwater fishtanks in his home in Beverly Park, California, on October 6.

Photograph by Don Flood.

High on the slopes above Beverly Hills, so high the clouds sometimes waft beneath it, one of themost exclusive enclaves in Southern California hides behind a pair of mammoth iron gates. Ifyou're expected, a security guard will push a button and the gates will slowly open. Inside liesthe cosseted world of Beverly Park, a collection of gargantuan mansions where the smallesthomes, the few with floor space under 20,000 square feet, rarely sell for less than $10 million.Most aren't within view. This is a gated community where every home seems to have a high gateof its own. Its long list of celebrity occupants includes Eddie Murphy, Sylvester Stallone, BarryBonds, Reba McEntire, Rod Stewart, Martin Lawrence, Mike Medavoy, and a slew ofHollywood producers, and, oh yes, Denzel Washington, whose French-chteau-style mansion

clocks in at 60,000 square feet.

One of the cozier homes, among the few you can actually see from the street, belongs to SumnerRedstone, the 83-year-old billionaire who controls both CBS and Viacom, whose flagship assetsinclude Paramount Pictures and MTV Networks, making Redstone the boss of everyone fromKatie Couric and David Letterman to, technically at least, with Paramount's recent purchase ofDreamWorks, David Geffen and Steven Spielberg. Redstone's home, tucked into a cul-de-sacnext to Stallone's, is a long, low building of pale gold whose entry is flanked by pools teeming
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with koi and shoulder-high rushes. Down the hallway, to your left, is the indoor pool, whereRedstone swimsin the nudeevery afternoon. Also down the hall is the study where hespends much of each day on the phone, surrounded by tanks of his beloved saltwater fish. Outback, next to the infinity pool, with its 50-mile views over downtown, is the hot tub whereRedstone likes to shavein the nude, also. Right now there's a can of Gillette shaving cream

beside it.

This is the haven where, after spending most of the last two decades shuttling among hotel suites,Redstone has finally, until recently at least, found in his twilight years something approximatingpeaceand his happiness has much to do with the life he has built with his new, 44-year-oldwife, a sinewy onetime Manhattan schoolteacher named Paula Fortunato, now Paula Redstone. Afamous workaholic, Redstone withdrew here three years ago, turning over daily supervision ofhis empire to his 52-year-old daughter, Shari, Viacom C.E.O. Tom Freston, 60, and the man whoruns CBS, Les Moonves, 57. Between games of tennis, scattering brine shrimp to his fish, andsessions on the treadmillfully clothed, we're toldhe runs everything now by telephone.

Life in Beverly Park has its trials, however, even for a mogul of Redstone's heft. He had barelyadapted to his new routines when the rumors began to fly: that he was out of touch, that he hadlost his edge, that he was retiring. There were whispers about his health; down in Beverly Hills,everyone seems to have a story about Redstone walking into a restaurant wall. The perceptionthat he was becoming irrelevant was reflected in the Vanity FairNew Establishment rankingsthis fall, which saw him plunge from No. 3 in 2005 all the way to No. 30. Speculation aboutwhat would happen to his empire on his passing, from who would run it to what would be sold,rose by the month.

But then, in a span of less than two weeks, Redstone re-emerged this summer to fling twothunderbolts that rocked the media world: the "firing'' of Tom Cruise from his lucrative

production deal at Paramounthe actually let Cruise's deal lapseand the actual firing of hislongtime confidant Freston, MTV's co-founder, after barely eight months at Viacom's helm. Inthe media firestorms that ensued, Redstone thrust himself front and center, granting interviewafter interview in which he savaged Cruise as an overpaid, ill-behaved symbol of a Hollywoodstar system gone mad, and dismissed the popular Freston as an emperor who, he claims, fiddledwhile the company's stock price burned.

More on Paramount:
http://www.vanityfair.com/magazine/archive/1999/11/redstone199911


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Boston bookie. By now almost everyone knows Redstone's backstory, how, after narrowlysurviving a 1979 fire at Boston's Copley Plaza Hotel that left his right hand a gnarled claw andhis legs severely burned, he re-dedicated himself to business, a commitment that in 1986 led tohis out-of-the-blue, all-or-nothing takeover of Viacom, then to the massive 199394 battle inwhich he bested Barry Diller and half the moguls in Hollywood for control of Paramount, then to

the 2000 merger with CBS, then to the decision last year, enacted in the face of Viacom'ssagging stock price, to split the operations of Viacom and CBS into separate companies.

Through it all Redstone remained cantankerous and combative, a C.E.O. who viewed his stockprice as a barometer measuring his self-worth and, above all, a tireless worker who spent everywaking hour in his Times Square office because well, he had nothing else to do. (Redstone is

so obsessed with his stock price that his Lincoln Town Car is outfitted with a DirecTV satellitedish on the roof so that he can watch CNBC.) What private life Redstone had was relegated tohotel suites in Manhattan, first at the Carlyle hotel, later at the St. Regis. He was alone there,separated from his wife of more than 50 years, Phyllis.

What changed it all, as so often happens, was a woman. At the heart of Redstone's new life, infact, is an unlikely love story, one he and Paula haven't discussed publicly until now. It began in2001. Phyllis lived quietly in Boston, while he worked in New York. During the 1990s, Redstonemore or less openly dated other women, notably Christine Peters, ex-wife of producer Jon Peters.Nothing, however, appeared to soften his sharp edges; subordinates viewed him as a crabby oldman who scoffed at executives who left before seven at night. A number of associates felt steadycompanionship might make him happier, or at least make his twilight years less lonely.

One of Redstone's brokers at Bear Stearns, Steven Sweetwood, who supervises Viacom's stock-buyback plans, was ruminating about the situation with another Bear Stearns executive when thesecond executive mentioned that his wife had a friend, an elementary-school teacher, who had

never married. The two Wall Streeters conspired to arrange a blind date.

"Let me tell you the story,'' Paula Redstone says. A slim, attractive brunette, she leans forward onthe edge of a sofa to Redstone's left, elbows on knees, as we talk. The two have been inseparablesince marrying in April 2003, never spending a night apart. At industry conferences, parties, andjust about anywhere Redstone is seen these days, she is at his side. Lately she's even been spottedsitting in on meetings at Viacom, trying to better understand Redstone's business.

Paula is a cardiologist's daughter from Toms River, New Jersey, a middle child who attendedAmerican University, in Washington, D.C., with no raging career ambitions. She worked for apharmaceutical company but hated it, then spent several years as a receptionist in New York'sGarment District. In her mid-20s she decided to pursue her one dream: to become a pastry chef.She worked in restaurants in Philadelphia, London, Palm Beach, and New York for several yearsbefore the long hours left her burned out. During a soul-searching talk, her mother, a nurse,suggested she try teaching. Paula leapt at the idea, enrolled at New York University, and, hercertificate in hand, began teaching third-graders at P.S. 158, on Manhattan's Upper East Side.

For 13 years she loved the work, enjoying a circle of friends who often gathered in her one-bedroom apartment, on East 72nd Street, but somehow she never found a partner in life. "I had a


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relationship here and there, but, you know, I was just tired,'' she says. "I tried a couple of blinddates, which were disasters. I was happy. I had a great job, great friends. I was fulfilled. WhenSteven called [about the blind date], I just said, 'No, I'm too tired. Guys in New York are suchjerks. They don't pay, they want sex before you even get out of the car.' I remember I actuallyasked, 'Can this joker even read?' I just said, 'No, I've got to stay home and grade papers.'''

Sweetwood, however, would not be denied. "Let me give you his name,'' he said. "SumnerRedstone.''

"Wait,'' she said, "let me get a pencil.''

"You're kidding, right?'' Sweetwood said. "You don't know the name?''

"He's not a parent at the school, is he?'' she asked. "Because I don't date parents in the school.''Sweetwood patiently explained that Redstone was chairman of a media conglomerate namedViacom. This meant nothing to Paula. Sweetwood listed Viacom's assets: MTV Networks,

Paramount Picturesall of it. Paula listened, and finally, Sweetwood recalls, "she said, 'For onedate, sure.'''

Which is how Paula Fortunato, a person utterly oblivious to the ways of Wall Street andHollywood, arrived one night at a midtown Manhattan restaurant named Il Postino with only thevaguest idea who her date really was. She was so pessimistic she stuffed extra cash into her pursein case she needed money for a taxi home.

For his part, Redstone says he was intrigued by the idea of meeting a schoolteacher; he says itwas about his appreciation for educators, but one suspects the notion of dating someonecompletely outside his orbit was equally appealing. He was nervous enough that he brought

along a Bear Stearns banker and his girlfriend. When Paula walked into the restaurant, "I didtake a look at her [and thought], Not bad,'' he recalls. "She talked about her life at school, making$50,000 a year. I didn't know how she could live.'' He found her ignorance of his worldenchanting.

"I remember when I mentioned Barry Diller,'' Redstone says, "she asked, 'Is he Phyllis Diller'shusband?'''

"It's true,'' Paula says, "and, you know, I found him extremely charming. He looks you in theeyes. He listened. He would touch my hand when he spoke. He was a true gentleman. He had somany great stories. And he listened to me. He really did.'' The first inkling Paula had of her date's

prominence was the unusual attention their table was getting. Other diners glanced their way andwhispered. The food appeared within minutes, and the service seemed incredibly attentive. AsPaula recalls, "It didn't take me long to figure out he''she smiles at Redstone"was the onebringing the attention.''

Redstone telephoned the next day. "I told you,'' Redstone says with a smile. "Patience is not avirtue.''


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He asked her to a party that evening. She said, "Not tonight.''

"Are you playing hard to get?'' Redstone asked.

No, she said. She had parent-teacher conferences that evening. Well, Redstone said, he would

pick her up afterward. Paula remembers changing into her cocktail dress in a classroom closet,furiously brushing chalk dust off her hands. Earlier that day Redstone had messengered over apacket of his press clippings. Not to brag, he says: "I was trying to let her know who I was.'' Shewas less intimidated by his job than by the fabulous women at the party that night. "Thesewomen were so buffed and polished and varnished,'' she remembers, "and I'm still dusting chalkoff my hands.''

In no time they were inseparable. Redstone was aghast at her tiny apartment, which henicknamed "Ratland.'' He was spending more and more time in Los Angeles, and he begged herto come with him, but she insisted she wouldn't miss school days. So they developed a routine.Every Friday around four o'clock Redstone would sit in his limousine two blocks from P.S. 158,

waiting for school to let out; not wanting to be thought a show-off, Paula wouldn't let him comeany closer. The limo whisked them to Teterboro Airport, in New Jersey, where Redstone's jetwas waiting. They were usually in Los Angeles in time for dinner at Dan Tana's or one ofRedstone's other favorite restaurants. At first they stayed at the Beverly Hills Hotel, then theHotel Bel-Air. Saturday afternoons Redstone exercised while Paula graded papers. Saturdaynights they attended parties, at the homes of such Hollywood old-guard couples as Marvin andBarbara Davis and Michael and Shakira Caine. By Sunday afternoon they were back on theplane, jetting east. "I never missed a day of school,'' Paula says with pride. "That was non-negotiable.''

What was it like, she is asked, dating a billionaire? "It was never about the money,'' says Paula,

jaw set firmly. "He was just a great guy. He used to send me lilacs.''

"I'm ashamed,'' Redstone says. "I was like a schoolboy.'' Unfortunately, he was still a marriedschoolboy. It took almost two years for Redstone to finalize his divorce, a period in which, Paulaadmits, her family voiced doubts about his intentions. "They didn't really know whether tobelieve his divorce story,'' she says.

"When we first all found out, how should I put this, we all thought like everyone else thinks: It'sa little odd,'' says Jim Geswelli, a businessman who is married to Paula's sister. "Sumner is somuch older. Then we met him, and, you know, Sumner, he's a very tough person to get to know,as a friend. He's not an easy person to talk to. In the beginning, he didn't seem to talk about toomuch. As time went by, though, we became great friends, surprisingly. And he and Paula, well,there's a real spark there. You can see it.''

Today the Redstones are frequent guests at the Geswelli home, in tony New Vernon, New Jersey,staying as long as 10 days during one recent Christmas visit. The Geswellis come to BeverlyPark whenever they can, although they have to brace themselves for Redstone's hours. "At fouro'clock in the morning, he gets on the intercom system and starts going, 'Coffee, coffee, coffee,'''


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Geswelli says with a sigh. "Over time, you know, he gets louder and louder, and finally, by five,someone goes down to have coffee with him. The day starts off very early there.''

No one involved can remember exactly how Redstone proposed. "I just remember one day hebrought home a whole bunch of rings, and I chose one,'' Paula says. "At first I didn't wear it in

public. I remember one night we were at Marvin and Barbara Davis's, though, and Sumnercouldn't stop smiling. We were sitting with Larry King, and Larry said something like 'What'sgoing on with you two?' And Sumner told me to go ahead and show him the ring.''

Once the divorce went throughRedstone paid an undisclosed sum rumored to be in thehundreds of millions (his spokesperson denies this)he and Paula married at Temple Emanu-El,on Fifth Avenue. Tony Bennett sang at the reception. From that point on, friends and associatesagree, Redstone was, if not a changed man, a happier man. "He's easier to deal with now,'' saysone Viacom executive. "She's made him easier just to be with. Now, sometimes he talks aboutsomething besides business. Everyone at the company just loves her.'' "There's no question,Paula brings out the better side of Sumner Redstone,'' Les Moonves told me. "Paula doesn't take

any guff from him. She'll say, 'Sumner, behave yourself.' I don't know if it's true, but I hear shegives him demerits if he misbehaves. He's on a point system.''

Up, Above the World

Once he had a new wife, Redstone wanted a home. Just before their marriage, he told Paula hewanted one in Southern California. They looked at several houses before Redstone pushedthrough the back doors of this one, saw the view, and said, "We'll buy it.'' The house, which wasempty at the time, was actually owned by the next-door neighbor Sylvester Stallone. AsRedstone tells it, Stallone had bought it upon hearing that Suge Knight, the rap-musicimpresario, was interested. Stallone was so happy at the prospect of having Viacom's C.E.O. next

door, Redstone boasts, that he sold it to him for $1.5 million below list.

Paula leads the tour, Redstone shuffling behind. At the end of the living room an entire wall hasbeen replaced with an enormous tank for Redstone's fish. Rounding the corner into the study, onerealizes that this is only one of four tanks in the room, each teeming with hundreds ofmulticolored fish. There are two more in the corridor outside: "Overflow One'' and "OverflowTwo,'' Paula calls them. Redstone actually had tiny cameras inserted into the two tanks so that hecould watch them on the study's television.

"It's so calming,'' Paula muses. "It's mesmerizing.''

"I feel attached to them,'' Redstone volunteers. "If a fish dies, it really affects me.''

The study, or "the fish room,'' as Redstone calls it, is the center of his daily routine. After risingat four, he throws on a robe, plops down in a soft chair in the study, switches on CNBC, andbegins making his morning calls; there's a tray beside his chair with a bottle of pills on top. Hisfirst calls usually go to Les Moonves or the executive who replaced Tom Freston at Viacom,Philippe Dauman. At 6:309:30 eastern timethe New York Stock Exchange opens, andRedstone spends the rest of the morning on the phone with Sweetwood at Bear Stearns, quietly


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orchestrating purchases of Viacom stock; this kind of "repurchase'' program is a popular way toboost the price of a company's shares. At one o'clock, just before the market closes in New York,he finally puts the phone down and goes to exercise.

Paula shows us the way. Past the screening room, the walls of the home's main hallway are lined

with a number of drawings, many by Paula. "See that one?'' she says as we stop in front of a folk-artish rendering of Sumner and her on the shore of a lake. Water appears beneath Redstone's feet."Sumner really likes this one,'' Paula says, her voice lowering to a mock whisper. "Because itlooks like he's walking on water.'' The drawing was a gift from Tom and Kathy Freston. "I hopewe stay friends with Tom and Kathy,'' she says.

"I do, too,'' Redstone says.

On the far side of the house is the exercise area, an indoor pool flanked by a room containingRedstone's treadmill. Every day he spends 20 minutes on it, then 35 on a stationary bike, then 8minutes or so in the pool. His houseman, Carlos, stands by with a telephone as he swims. "The

whole time I'm panting,'' Redstone interjects, "which is good, because I want to live.'' He alsoplays tennis with investor Kirk Kerkorian and Alex Olmedo, the pro at the Beverly Hills Hotel.

Outside, Paula leads the way through a small backyard of thick grass, past the pool, and down tothe Jacuzzi, with its can of Gillette. The slope beside it was covered with ferns until the dayRedstone thought he saw something move and a gardener fished out a six-foot rattlesnake. Nowit's a cactus garden. As we cross to the far side of the yard, past the tennis court, Paula leads methrough her fruit garden. As she plucks a ripe fig and thrusts it into my hand, I blurt out,awkwardly, whether it will bother her that she won't be having Redstone's children.

"Well,'' she says, not missing a beat, "I look at it like this. I've had 40 children for 13 years. Now

our dogs are our children.'' She takes a deep breath. "I have it all here,'' she says. "I love myhouse. I love my husband. I love everything about it.''

Redstone's afternoon ends after his shave, when he slips back into his robe"so I'm not sitting inthe nude, you know''and returns to the fish room for more phone calls. Most nights he andPaula dine early with friends, producer Mike Medavoy and his wife Irena; producer LeonardGoldberg and his wife, Wendy; and former Disney head Michael Eisner and his wife, Jane.Bedtime is on the early side. "I would like to go to bed earlier, but Paula won't go to sleep until10,'' Redstone says.

"No, this is the way it is,'' Paula says. "He wants 9, I want 11, so we settle at 10.''

After the tour, Redstone sits down at an outside table, laboriously inscribes a message for me inhis 2001 autobiography,A Passion to Win,and smiles. Here with Paula in Beverly Park, he is avery happy man.

Iknow what people think,'' Redstone is saying, glancing around the house, "but there was noway I was going to fade into the distance and live a life of luxury in Beverly Hills.''


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To hear Redstone tell it, his seclusion here in Beverly Park changed little about the way he runsCBS and Viacom, just where he runs them. He's not having a comeback, he growls; he feels henever went away.

He is especially irked at his slide in the Vanity FairNew Establishment ranking, mentioning the

matter four separate times; he even had his P.R. man, Carl Folta, call the magazine to complain."The fact is, nothing really important can happen at either [Viacom or CBS] without me clearingit,'' Redstone says. "That, of course, was the story with Tom Cruise, and with Tom Freston. Iguess that caused Vanity Fairto wake up to the idea that I wasn't really stepping away frombusiness.''

The sequence of events that led to the uproar in Redstone's world today began with theresignation of Mel Karmazin, then the president and chief operating officer of Viacom andRedstone's heir apparent, in 2004. Suddenly, Redstone was faced with the decision of who wouldreplace Karmazin, and thus who in all likelihood would eventually run the united companieswhen Redstone retired; Redstone had already made up his mind to step down as C.E.O. in three

years. The two candidates were obvious: Les Moonves, the hard-charging chairman and C.E.O.of CBS, and Freston, the genial head of MTV Networks, a man who had worked for Redstonesince 1986. Redstone chose Frestonand that's where, in retrospect, Redstone says the problembegan.

Then, as now, MTV was Viacom's crown jewel, accounting for 70 percent of its 2005 revenuesand almost all its profit. Tall and craggily handsome, with spiky salt-and-pepper hair, Frestonhad been on board since its founding, moving up through the ranks to become MTV's C.E.O. in1987. Shuttling between Los Angeles and New York, he was universally liked on both coastsand inspired genuine loyalty in the ranks. A prominent Democratic fund-raiser who runs in acircle of friends that includes Jimmy Buffett, John Mellencamp,Rolling Stone's Jann Wenner,

producer Brian Grazer, William Morris head Jim Wiatt, and Yahoo C.E.O. Terry Semel (as wellas the editor of this magazine), Freston is married to an author of relationship-advice books, theformer Kathy Law. In New York, they live in the Upper East Side town house that oncebelonged to Andy Warhol; they also have houses in Beverly Hills and Montecito. "Tom,'' saysone longtime friend, a former studio head, "is a guy who went through life trying to do somegood and make some friendsfor Viacom, I mean. I have never in my entire life met a singleperson who didn't like the guy.'' (Freston, who left for a prolonged Asian vacation following hisdismissal, declined comment for this story.)

"No, I'll Not Weep" (King L ear,Act II, Scene IV)

One evening following Karmazin's announcement, Redstone summoned Freston to his suite atthe Carlyle and offered him the job as Viacom's new presidentand Redstone's heir apparent."This was historic,'' Redstone remembers, a final passing of the torch, a final resolution of thesuccession issue that had preoccupied Wall Street analysts and journalists for years. "But,''Redstone goes on, "when I offered the job to Tom that night, he said, 'Sumner, I'm notcomfortable being C.E.O. of Viacom. I'd rather just be C.E.O. of MTV Networks.''' Redstonewas flummoxed, but accepted Freston's wishes. "That's really when my doubts about Tombegan,'' he adds.


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The moment Freston left the suite, Redstone called Moonves and ordered him to the Carlyle."That same evening, I offered the job to Les,'' he remembers. "And knowing Lesbang!hetakes it so fast.'' They shook hands on it. It would be announced the next day: Les Moonves, notTom Freston, was to be Sumner Redstone's successor.

Then, the very next morning, Freston contacted Redstone and said he'd had a change of heart. Hewould accept the job after all. "I guess he talked it over with Kathy, but I was really in a spot,''Redstone says. "I was in a very difficult position. Tom said no, then yes. I had to do something.So, to make everyone happy, I had to split the company.'' Redstone chuckles when asked aboutMoonves's reaction to the news. "Let me tell you,'' he says, "Les wasn't too happy.''

Redstone divided Viacom into two spheres, CBS and its related businesses for Moonves, withMTV, Paramount, and everything else going to Freston. The split worked so well that thefollowing June, faced with the continuing deterioration of Viacom's stock price, Redstoneproposed making it formal, dividing CBS and Viacom into separate companies. In one boldstroke, Moonves and Freston became C.E.O.'s of publicly held companies, something neither

man had done before. Few had doubts that Moonves could adapt, but from the beginning therewere concerns whether Freston, an inside man all his career, would warm to a C.E.O.'s crucialjob, the promotion of his stock to Wall Street.

"Frankly, I thought Tom was over his head as a public-company C.E.O.,'' says one investmentbanker who knows him. "Half his time as a C.E.O. has to be dealing with Wall Street and craplike that. That wasn't what Tom was good at. He's an operating guy.''

Redstone heard the doubters, but was willing to see how Freston adapted to his new role, whichhe formally assumed when the split became official last January. If Viacom's stock price is anyindication, Wall Street was underwhelmed; thanks in large part to Freston's inability to make any

kind of splash in the online world, the stock fell 20 percent in his eight months at the helm.Redstone characterizes this as startling; after all, analysts had forecast CBS stock to be thetortoise, Viacom the hare. "The stock was down 20 percent! And they were supposed to be thehot stock!'' Redstone barks, even though in the next breath he admits his own culpability. "Iquestioned whether it would work out [with Tom]. Tom himself said he wasn't comfortabledealing with Wall Street.'' He sighs. "As good as Tom was running MTV, he was not the bestperson to run Viacom.''

The biggest knock against Freston, at least in Redstone's mind, was his failure to buy MySpace,the red-hot Internet site where millions of American teenagers create their own home pages andfuriously network. After his dismissal, the newspapers were full of unattributed criticism aimedat Freston for dallying with MySpace for months until Rupert Murdoch's News Corp. swept inand bought its parent company out from under his nose for $580 million. One question toRedstone makes it clear who was behind those blind quotes. "We lost that deal because Tom wastoo slow,'' he says. "That was the problem with Tom. This distinguished him from the way Leswould've done that deal, or the way I would have.''

The Internet represents the future of businesses involved in intellectual property, and as such is asore spot for Redstone. Viacom's online efforts to date have been patchy and undistinguished, a


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string of minor acquisitions and, most notably, a new MTV Web site called Overdrive that hasfloppedloudly. Which, in retrospect, has made Viacom's inability to buy MySpace all the morepainful. The irony is that Freston's MTV was the first suitor to begin sniffing around MySpace,in late 2004. Within weeks, Viacom executives were meeting with MySpace executives inearnest.

While this was necessary to understand its business, in hindsight Freston made a miscalculation.His approach to MySpace all but ignored the fact that MySpace was already controlled by anInternet company called Intermix, which specializes in spyware and other e-commercetechniques, and that Intermix had an option for the 47 percent of MySpace stock that was stillowned by minority partners. MySpace, in effect, was not in control of its own destiny. "Youdidn't know who was totally in charge there,'' acknowledges a Viacom executive involved in thetalks. Then, in the middle of negotiations that spring, the New York attorney general, EliotSpitzer, sued Intermix for fraud. A Viacom attorney who reported directly to Redstone decreed ahalt to the negotiations. "The decision was we had to wait till the Spitzer decision came in,'' saysthe Viacom executive. "So the deal just sat there for months and months.'' Freston, this executive

asserts, was powerless to proceed. Freston's allies inside Viacom, meanwhile, portray Redstoneas far less interested in MySpace than Freston himself was.

Intermix, however, was not inactive during this period. When its executives caught wind ofViacom's interest, they brought in Montgomery & Co., an investment-banking boutique thatspecializes in new media, and a team of lawyers to consider the sale of Intermix itself, along withits MySpace option. "Clearly, as Viacom got interested, we wanted another offer on the table, sowe brought in Fox,'' says a person on the Intermix team. "Only after that did we plan to go seeViacom. No one thought Viacom would make a deal first. We were laughing because we'd donea lot of deals with Viacom. We knew they'd just send 20 people and have meetings aftermeetings and never get anywhere.'' The Intermix adviser, for his part, says Redstone's criticismof Freston is on the mark. "That's just how Viacom was at the time,'' he says.

Once the Spitzer lawsuit was nearing settlement, in the summer of 2005, Murdoch bid $580million for Intermix. Montgomery and the lawyers invited Viacom to top it. "Viacom's answerwas 'We're not sure we can get to that valuewe'll get back to you next week,''' says theIntermix adviser. "But Fox wanted to do the deal that same weekend, so we did.'' The Viacomexecutive disputes this, saying he believed Viacom still had until Monday morning to bid. Ameeting of Viacom's board was held, at which Freston and two board members, Redstone'sdaughter, Shari, and Ace Greenberg, chairman of the executive committee of Bear Stearns, urgedRedstone to counterbid.

"I remember Ace said, 'Don't be afraid to go for it,''' says a person who attended the boardmeeting. "But Sumner and Philippe Dauman said it was irrational, that Rupert was irrational, thathe would pay anything, that they would end up [paying more than] $800 million.''

Redstone was incensed. His anger only grew after Murdoch, upon completing the MySpace deal,won back the purchase price and more by selling the right to advertise on MySpace to Google fora stunning $900 million. In Redstone's mind, it was bad enough that Freston had let the world'shottest Internet property get away, but losing it to Murdoch was just too much. "No! Not him!''


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Redstone bellows, wagging a finger in my face. "I don't want to lose to him. Just like he wouldn'twant to lose to me. It was a humiliating experience. I know Murdoch well. There's no chance

of outbidding him! I wanted MySpace before that, before Murdoch got interested. It sat there forweeks while Tom, in his methodical way, was studying it, having committee meetings, doing duediligence. It went on and on and on! Tom let it get away! Les would've grabbed it! So would I!

And so we lost it.''

Afterward, Redstone says, Freston "came over here and sort of apologized, said why he didn't getit. He didn't talk about the period before the Fox offer, and I didn't remind him. I said, 'Look,Tom, you made a mistake. We all do. I'm sure it won't happen again.'''

This summer, 12 months after the MySpace debacle, and faced with the continuing fall ofViacom's stock, Redstone asked his board to consider whether Freston was the best man for thejob. He already had a replacement in mind, his longtime associate Philippe Dauman; Dauman,following a stretch in top positions at Viacom in the mid-1990s, had left to start a smallinvestment-banking company, but remained on Viacom's board. "I gave them all of Tom's

strengths and weaknesses, and all of Philippe's,'' Redstone insists. "The decision was up to theboard.''

While Freston's fate hung in the balance in August, Redstone found himself thrust into a crisis heinsists he never expected:

The firing of Tom Cruise, arguably the biggest movie star in the world.

Cruise Control

As Redstone tells it, he wasn't the first person in his own household to look askance at the string

of Cruisian antics over the last year: the manic hopping on Oprah's couch, the Today-showattacks on Brooke Shields for taking antidepressants, and his Katie Holmes thing. It was his wife,Redstone says, who turned on Cruise first, a contention Paula Redstone declines to elaborate oneven as her husband makes it. "Paula, like women everywhere, had come to hate him,'' Redstonedeclares. "The truth of the matter is, I did listen to her, but I make business decisions myself.''

And in terms of business, Redstone claims he felt Cruise was actually costing Paramount money.Cruise's production company, which the actor operates along with producing partner PaulaWagner, was paid $10 million a year to create movies for Paramount, and until this year had asterling track record, led by the first twoMission: Impossiblemovies, which grossed around$500 million each worldwide. (Overall, Cruise's films with Paramount have grossed $3 billionworldwide at the box office.) It's the performance ofMission: Impossible III,however, thatRedstone seized upon as he and his wife soured on Cruise's public utterances. The movie didexcellent business, earning just under $400 million worldwide, but Redstone felt the actor'sextracurricular behavior prevented it from making more. A Cruise spokesperson declined allcomment.

"When did I decide [to fire him]?'' Redstone asks. "I don't know. When he was on the Todayshow? When he was jumping on a couch at Oprah? He changed his handler, you know, to his


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sisternot a good idea. His behavior was entirely unacceptable to [my wife,] Paula, and to therest of the world. He didn't just turn one [woman] off. He turned off all women, and a lot ofmen. He was embarrassing the studio. And he was costing us a lot of money. We felt he costus $100, $150 million onMission: Impossible III.It was the best picture of the three, and it didthe worst.''

The deal with Cruise/Wagner Productions was scheduled to lapse at the end of August. Redstoneindicates he decided to cut ties to the company sometime last spring, waiting until the July timeframe to notify Freston and Paramount's C.E.O., Brad Grey. "I made my decision without theirsupport; I didn't tell anyone for months,'' Redstone says. "But [eventually] I made my positionclear to Tom and Brad, that he should be off the lot. They had some concerns.'' In fact, Frestonand Grey realized that "firing'' an actor with Cruise's visibility and track record, a highly unusualif not unprecedented move, would trigger a severe backlash in Hollywood's creative community.Still, it was Redstone's company, and they were his employees.

"This wasn't just Sumnerhe had a right to feel the way he did,'' says a person involved in

Paramount's deliberations. "I mean, women didn't go see the movie, because of Tom Cruise'sbehavior. It showed up in the research.'' Freston and Grey, this person says, had put a lowball bidon the table to renew the contract$2.5 million, by all accountsand everyone involvedrealized that both sides would probably allow the deal to quietly lapse. "The negotiations hadstarted when Sumner weighed in,'' this person says. "Brad had to get rid of the offer, which is ahard thing to do. They were working toward that. They understood where Sumner was comingfrom. They really did. They were trying to pull [the offer] back, and when they were trying to dothat, Sumner went public. That's when everything hit the fan.''

Redstone characterizes his decision to "go public'' as entirely an accident. A savvy Wall StreetJournalreporter, Merissa Marr, caught wind of the story and telephoned Redstone at his home,

and Redstone told her everything, castigating Cruise for his behavior. Redstone acknowledgeshis comments were unnecessary, but he brushes aside any suggestion he went public merely tore-assert his role as Viacom's alpha dog. Still, there's no denying the sparkle in his eyes as herecounts the reaction to his comments. Clearly, he loved every minute of it.

"I wasn't looking for an explosion,'' Redstone insists, "but I didn't mind it. The explosion wasgood. It sent a message to the rest of the world that the time of the big star getting all this moneyis over. And it is! I would like to think that what I did, or what we did, has had a salutary effecton the rest of the industry.''

The problem, though, was that Redstone's comments severely undercut Freston's and Grey'sauthority. "Tom was very upset and registered it with Sumner," says a close Freston ally. "Thatwas probably not a good thing. What bothered him was that Brad should've been handling this.This was not for Sumner to reach down into the company and do this, because it wasdemoralizing for Paramount, and demoralizing for Viacom. This was something Tom felt Bradwas handling." Freston was also irked at a quote Redstone gave theLos Angeles Times,to theeffect that firing Cruise was difficult for Freston because "he's in the talent business." Says alongtime Freston friend, "When I saw that, I thought, Wait a minute. That was a personal shot at


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15/15

"Now you're putting me on the spot,'' he begins. "Originally, in my will '' When Paula shootshim a look, Redstone abruptly changes tack. "It will depend on the board,'' he says. When it'spointed out that this is a non-answer, Redstone says, "I'll be dead. There's no way I leave this jobbefore I die.'' Pressed further, Redstone says Shari's future "is subject to two points. That shewould want to [succeed me]. And the boards of both companies would have to approve her.''Through a spokesman, Shari Redstone declined comment.

The question of succession is forgotten until the interview ends, when Redstone rises for the firsttime in two solid hours. Suddenly he stumbles, his knees buckle, he pitches to his right andbegins to fall. He catches himself on a chair just as Paula lunges to his side, wrapping her armsaround his torso and helping him stand. Just as she lets go, though, he begins to fall again. Thistime she eases him back into his chair.

"I'm fine, I'm fine,'' Redstone mutters.

"I should've put his feet up,'' Paula says. I'm too embarrassed to ask whether this is an ongoingproblem. After a bit, Redstone rises and follows us through the house. He is a billionaire, a man

who dictates the collective fate of thousands of lives, but as he stands there waving good-bye, hiseyes no longer as steady as they were an hour before, one is reminded there are some things inlife even a mogul can't control.

Bryan Burroughis a Vanity Fairspecial correspondent.
http://www.vanityfair.com/magazine/archive/1999/11/redstone199911

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Vanity Fair - Sumner Redstone, Sleeping With the Fishes

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