Sumner Redstone, Man Who Shaped Modern Entertainment, dies at 97

(Featured image Source: ViacomCBS)

Summary

• A Harvard alum, a US Army veteran, a lawyer – media mogul Sumner Redstone donned several hats successfully before turning around the entire entertainment industry.
• Redstone ushered in the media multiplex model, expanding to TV, films and video rentals
• Through National Amusements, he acquired Viacom and later CBS. The two merged to form media mammoth ViacomCBS.

Sumner Redstone – the billionaire media boss, business innovator and the man who gave shape to the modern entertainment industry – died late on Tuesday (March 11). He was 97.

Both ViacomCBS and National Amusements, the companies owned by the American media mogul, confirmed the news in separate official statements.

Beginning his career with a chain of drive-in American movie theaters, the Boston native went on to build the sprawling conglomerate, ViacomCBS, which included entertainment giants such Paramount Pictures, CBS Entertainment Group, MTV, VH1, Comedy Central, Nickelodeon and Flix.

In recent years, the public glare hovered over his contentious relationship with daughter Shari E. Redstone, who later took control of the conglomerate’s day to-day affairs.

Formative Years

Born to Jewish parents Michael Redstone and Max Rothstein in 1923, Redstone was an exceptional student who went on pursue his bachelors and LLB from Harvard University and later built a successful law career. He worked with the US Army intelligence division, “breaking Japanese military and diplomatic codes during World War II” and earning several military accolades for the same.

He became a clerk with the United States Court of Appeals, a special assistant to Attorney General, and taught law at the University of San Francisco.

He inherited his father’s drive-in movie theater company National Amusements, becoming its CEO in 1967 and starting long illustrious and defining career in the media industry.

(Source: ViacomCBS)

The Viacom Years

Following years of negotiation, lawsuits and hostile transactions, National Amusements acquired Viacom in 1987. By that time, Redstone had already developed a massive multiplex media model that expanded to the world of television, films, and video rentals. Through Viacom, Redstone owned the popular MTV Networks – a network that raised the Generation X.

Thereafter, he acquired Paramount Communications – owner of Paramount Pictures, which went on ten-year hit delivering streak, producing blockbusters such as Saving Private Ryan, Titanic, Forrest Gump, Braveheart and Mission: Impossible movie franchise. With Paramount, Redstone also adapted the new-age digital film technology and later acquired DreamWorks SKG. Other Paramount movie hits include Paranormal Activity, Up in the Air, Shutter Island, and movie series Transformers and Star Trek.

The Viacom-CBS Marriage

In 2000, Redstone initiated Viacom’s mega merger with CBS, giving birth to $39.8-billion global media giant. The companies split in 2006 and merged again in December 2019. At the peak of ViacomCBS businesses, Redstone reportedly controlled shares worth over US$ 80 billion.

With CBS group in the kitty, Redstone was now the owner of a diverse businesses including the King World Productions that created landmark American shows such as The Oprah Winfrey Show, Dr. Phil, Wheel of Fortune, and Jeopardy!

Redstone’s Tenacity

At age 55, Redstone suffered severe burns in a hotel fire, dangling by the window ledge and half his body was scorched. He underwent 30 hours of extensive surgery with doctors warning his life wouldn’t be normal again. Eight years later, Redstone’s tenacity led him to play tennis, run on treadmill every day and launch a hostile takeover of Viacom.

However, Redstone’s later years were marred in legal disputes with family over running the business and a very public litigation with a former live-in companion.

He was also at loggerheads with his children – son Brent suing over shares in National Amusements and daughter Shari (vice chairperson of Viacom and CBS) publicly debating on business matters. The father-daughter duo clashed over debts and corporate decisions, leading Sumner to announce he would never turn over the business reins to Shari. They later resolved the issues.

Redstone stepped out of his semiretirement at 83 to sever ties with Paramount’s biggest star Tom Cruise, who’s offscreen behavior of jumping on couch on Oprah show and preaching Scientology.

ViacomCBS (NASDAQ:VIACA)

Stocks of ViacomCBS Inc have yielded nearly 14 percent returns over one month. The company shares are down by over 35 percent this year, suffering lows due to the ongoing pandemic crisis.

Over a decade, the entertainment giant’s stocks have advanced over 100 percent. At the time of writing this article, ViacomCBS Inc shares were trading at US$ 28.58.

ViacomCBS stock performance

(Source: NASDAQ)

Its current market capitalization is US$ 17.62 billion. The company pays an annual dividend of US$ 0.96 and has a current yield of 3.34 percent.

The broadcaster’s revenues in Q2 dropped by 12 percent year-over-over to US$ 6.275 billion due to decline in advertising revenue. However, the firm’s streaming business Pluto TV saw a 61 percent surge in subscribers in Q2. Subscriber addition on other streaming platforms (CBS Access and Showtime) went up 74 percent y-o-y.