By Sal Bommarito
A contentious battle for control of Sumner Redstone’s $42 billion media empire has been percolating for some time. The travails of his family should be a warning to all wealthy and prominent individuals regarding the transfer of power, money and businesses at the end of their lives.
Mr. Redstone is the 92 year-old founder of National Amusements whose mental competency is being challenged, from two perspectives. The immediate issue is that he recently signed papers that dismissed his long-time lover, companion and caregiver. For years, Manuela Herzer exercised significant influence over Redstone’s personal and medical decisions.
Redstone’s “ostracized” daughter, Shari Redstone, challenged the authority of Ms. Herzer. The latter claimed that Mr. Redstone was not competent to change his existing relationship with her.
Additionally, Redstone’s estate papers were amended. They formerly bequeathed one of Redstone’s mansions and millions of dollars to Herzer. No longer will Herzer receive anything from Redstone as a judge ruled in favor of Shari Redstone. Already, Herzer has received millions of dollars of benefits from her former benefactor. In response to the judge’s decision, Herzer has filed a $100 million suit against all those who opposed her.
From a corporate perspective, new legal jockeying is surely down the road. Viacom and CBS are two of National Amusement’s largest assets; both are publicly traded. Recently, Mr. Redstone was forced out of current management even while he continues to be the controlling shareholder in both companies. Last year, Redstone received $2 million of compensation, down from $13 million in 2014.
Redstone’s mental capacity has been in question for some time. As part of the aforementioned legal actions involving his caregiver, Redstone was interviewed and deemed to be suffering from dementia. The tape of his interview for the trial was critical to the judge’s decision to rule in favor of Shari Redstone, and it could be critical in a growing effort to take away all managerial control of Viacom and CBS from Mr. Redstone.
What’s interesting about this situation is that it depicts the problems for many people when a loved one or family member’s mental capacity declines. Decisions made by the people in their twilight years are subject to challenge by relatives and business colleagues. Unscrupulous opportunists often try to take advantage of a person’s ability to make sound decisions.
When money, even minuscule amounts compared to Redstone’s fortunes, is involved, comity in families can be disrupted and pit one child against another, and one business colleague against another.
The morale of the Redstone’s imbroglio is that the potential disruptions that can occur when a prominent person experiences dementia, and subsequently dies, should be considered long before these events occur.