Paramount Global: The House of Redstone

James B. Stewart and Rachel Abrams are the co-authors of Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy. They joined Motley Fool employee Catie Peiper to discuss:

• How billionaires try to bend reality.
• If Paramount Global chair Shari Redstone can innovate in a new media landscape.
• Problems with CEO succession at media companies.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on March 05, 2023.

James B. Stewart: In terms of her business judgment and acumen, I think it's fair to say that we do now she was pushing to merge the Viacom and the CBS companies into one larger company. I think she's pretty much been vindicated on that. There was no question today with the rise of the giant streaming services that size and scale in the entertainment industry now accounts for more than it probably ever has in the past. 

Chris Hill: I'm Chris Hill, and that's James B. Stewart, a Pulitzer Prize-winning columnist at The New York Times, and co-author of the new book, Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy. Warren Buffett made a clear bet on this company's future. Berkshire Hathaway owns 91 million shares of paramount global, the resulting media empire at the center of this book. My colleague Catie Peiper caught up with Stewart and coauthor Rachel Abrams to talk about the challenges facing Paramount Global's current chair, Shari Redstone, and stories involving the media conglomerates founder who just happens to be her father, Sumner Redstone, like the time he fired Tom Cruise after a bad interview.

Catie Peiper: There are so many riveting threads from your book that I could highlight for our audience. I was absolutely gripped while I was reading through it. There's made-for-reality TV drama of Sumner Redstone romantic affairs to the behind-the-scenes politics of CBS and Viacom's boardrooms politics that as a consumer I realized affected all of us. But yet the thing that struck me most was just the tragic figure of Redstone at the end of his life. Here's a billionaire Mogul who built this fast empire and was often fairly brazen in his attitude. Yet you guys kept relating these stories of him crying and his estrangement from his family. Not to start us off with such a hot topic, but what would you guys say she regretted most toward the end of his life?

Rachel Abrams: Well, certainly one of the things that was really interesting to experience working on this book is, here's a guy who just has such atrocious behavior. He's abusive to his daughter, he's horrible to women, he's horrible to people that he worked with. His son doesn't even talk to him after they become a strange. Yet at the end of his life, he's not the man he was when he was committing all this bad behavior. He is more of a shell of himself.

There are moments where you feel sorry for him because he's not the same person. But you also have to remind yourself that this man he has done so many things that I think somebody would say do not make them deserving of sympathy. What he regretted most, he never articulated regretting anything. I don't think that was part of his personal brand. But certainly at the end of his life, he reconciles with his daughter, who he had really chastised publicly and insulted and called names. I guess one might wonder, did he ever regret any of that? Possibly.

James B. Stewart: No, I think there's one simple moral of the story, if you need it, a vivid example of which is money and especially great wealth, does not buy happiness or peace of mind.

Catie Peiper: For those who may not be as familiar, you go into great detail, but could you explain the interplay between CBS and Viacom and how Redstone intersected those two?

James B. Stewart: Yeah. Those two companies have now been merged into what's called Paramount Global. Certainly, at his peak, Sumner Redstone was one of the towering media and entertainment figures over the last century. It was immensely wealthy, a billionaire many times over. These companies shaped what America and much of the world consumed in terms of entertainment and media, including news at CBS.

These were the CBS Television Network, CBS News division. Viacom was an umbrella that included the Paramount movie studio, that was the Crown Jewel and Sumner's empire, as well as many very popular cable channels, MTV, Nickelodeon, Cartoon Network, Comedy Central. One of the fascinating things to us about the story is that you see personal affairs of these characters spilling over dramatically into the business affairs. These, even though they were controlled by the Redstone family and by Sumner's Trust, are major publicly traded companies with thousands of employees and shareholders.

Catie Peiper: Les Moonves is in there in the thick of it too, which Rachel, I know you did a lot of reporting on during the rise of MeToo around that specifically.

Rachel Abrams: Yes. Jim and I got together because we were doing reporting on Les Moonves for The Times. He and I, I don't think we even knew each other before that actually. But Jim and I collaborated on a story about how Moonves attempts to keep a woman silent at the height of MeToo, when he's seeing all these other men being filled by accusations, Moonves' attempts to keep one specific woman silent is what ultimately got him ousted from CBS.

As you mentioned, I've been doing a lot of MeToo reporting, but that was really the story in particular that inspired the book. Jim and I both got tips relating to how Moonves was basically trying to keep this woman quiet. We were told to collaborate and we did the story about that that ultimately Jim and I both thought, wow, this is like there's just so much here that could be more than just one New York Times story.

James B. Stewart: I think it's worth mentioning that Les Moonves at his peak was a towering figure in media and entertainment in his own right. The Hollywood report named him the single most powerful person in the entertainment industry. He was famous for having brought CBS from first place in the ratings. He had this so-called golden gut and he knew that a hit show when it came and he was much revered and admired, including by Shari Redstone who he ultimately try it and turned against. Until these really pretty awful MeToo allegations surfaced.

Catie Peiper: I was actually going to ask this later, but I'll ask this now since we've brought it up, but we've recently seen with another company, Disney, this protocols CEO return to the fold. I guess my question is, after having gone through all of your research and work, do you see maybe a similar narrative potentially on the horizon for Les Moonves and CBS?

James B. Stewart: Well, I'm very familiar with Disney. I wrote in earlier book about that too. I think the issue of succession, which of course brings up the very popular HBO series which many people have compared this story. More specifically succession when you have a very powerful, long-serving CEO, not just Disney, there's been Salesforce, and Starbucks, and McDonald's, other issues. There is a drama there, Shakespearean drama in all these cases. I do think I would not directly compare Disney to to Paramount Sumner Redstone situation, largely because Disney does not have controlling shareholder, which made a big difference in what was going on at the Paramount Global Empire.

There's a lot more allegations of impropriety, in the Paramount situation. But what makes these things, I think in some ways similar and common is that when you're talking about the chief executive of a multi-billion dollar corporation, especially one that has so much influence over American culture, like a Disney or a paramount, you're going to have a fight over that. The money is off the chart, the power is off the chart. There's glamour or celebrities hanging around. Many people aspire to that and once they have it, they have trouble giving it up. Sumner Redstone kept insisting he was going to live forever and he came to Hollywood as Mogul really only when he was in his '70s. He was still going strong until it began to decline in his '90s.

Catie Peiper: Just brings me to probably my favorite character, if we were to translate this to a television series like succession, is Shari Redstone. When I was reading all of these narratives, she often became the most sympathetic person in and out of the board room. I guess my question is now this carnage of the Corporate Civil War is starting to settle, do we see her as being an innovative corporate leader moving forward in the same image as her father?

Rachel Abrams: I love that you pointed out that she is your favorite character because some of the feedback I've been getting from friends reading the book is, there's nobody to root for in this book. She's the only one that you can route for. She's going to be an innovative corporate leader. Time will tell. Jim, I'd actually be curious to hear your thoughts about on that second part of the question.

James B. Stewart: Yeah. I think Shari is a sympathetic character. Again, the book has been compared to the television series. But one of the things in the television series people said, oh, there's nobody to root for here, but I think in this book, you can read for share it for good reason. At least she shows a modicum of common sense. She has some self-awareness. The outrageous behavior that's going on around her is pretty remarkable. Yeah, I think she is a sympathetic character.

In terms of her business judgment and acumen, I think it's fair to say that we do now, I mean, she was pushing to merge the Viacom and the CVS companies into one larger company. I think she's pretty much been vindicated on that. There is no question today with the rise of the giant streaming services that size and scale in the entertainment industry now accounts for more than it probably ever has in the past. Even now, people think Paramount is too small to compete long-term with Disney Plus, Netflix, Amazon, these multi-billion-dollar, very deep-pocketed companies, but there's no question that it's stronger together than they were when they were separate.

Well, ultimately what's going to happen, and again, I think most people on Wall Street feel it's not big enough and it will probably have to merge with somebody one of these days. I think Shari Redstone herself wouldn't stand in the way if she got a good offer from a reputable company, she wouldn't oppose consolidation, but she doesn't want a fire her sale price and she doesn't want to have a gun to her head.

Catie Peiper: Building off of that, do you have the sense at the end of this narrative that you've woven together for us that she has been able to shake off the image that her father and Les Moonves and the other board members cast for her early on and has been able to make her own image in her own way or is she always going to be operating under that reputation?

Rachel Abrams: It's hard to think that she's totally going to escape the shadow of her father who was such a large and looming figure, but she is certainly not him. The old guard is no longer there and she has expressed her commitment to changing the culture. Now obviously, it is very hard to change a corporate culture, and certainly a corporate culture at a corporation as big as Paramount. I think one thing we've seen in the past few years, the MeToo movement that's been really clear is that companies have gotten really good at damaged control and making a manicured public statement. They've gotten less good at actually rooting out systemic problems. But as far as we can tell, she's certainly committing to it not being her father's company.

By the way, I think that that was really evident when she first started hearing rumors about Les Moonves and his possible behavior toward women. She brings it up with the board, she pushes for a real investigation. What ends up happening, as we have said countless times over, is a total farce. The board of directors, they hire an outside lawyer and essentially what they do is just ask Les Moonves, hey, did you ever do anything wrong with women? When he says no, they say great, basically thanks for your time. Shari finds us totally unacceptable. I guess I'll just say is that it's not just that Les Moonves gets kicked out and she pays a lot of lip service to changing the company, she was trying to push for the right things back when he was still in power. I think that does say a lot.

James B. Stewart: I think she's also matured even in the years we've been working on this book. There's a scene where she early on goes to the big mogul conference at Sun Valley and there's Jeff Bezos there and there's Bill Gates and these titans of the business are roaming around and she's there by herself for the first time. I think understandably, she was very intimidated and felt insecure and like, how am I going to hold my own with people like that? I think over the years she's gained a lot of self-confidence, greater maturity, she's more articulate, she's comfortable addressing the public constituencies, big corporations like this. She really has made a lot of progress, including the fact that when she started and this way she's drawn into the story earlier on our book, she didn't want that, she didn't want to be caught up in her father's business.

She been there, she'd been burned, she'd been humiliated by him, she didn't want to go back, but she had no choice given that the people who are preying in her absence, so she gradually comes back in. Then I think as she did become more involved and did gain some influence over the companies and now she's Vice Chairman of Paramount Global, she likes it and like many people who get a taste of that, it's interesting. You're at the center of some of the most important cultural movements that are going on in the world and the country today. I think she really has grown and matured in her role over the years.

Catie Peiper: That's definitely something I noticed in the threats that you were weaving as she was reluctant, she continued to be reluctant, but it seemed that she's settled more into the mantle of it in the later days. But James, I think you mentioned something very interesting, is that she was drawn in in part because she felt like her father was really being prayed on by people both in the boardroom and at his home. I'm wondering if you could maybe paint a picture. We've talked a bit about the boardroom, but what was going on at his home during this period as well?

James B. Stewart: Well, here we have Sumner Redstone, he's a mogul, he's a multi-billionaire, he's in his 90s, he's alienated his own family through his bad behavior. He's surrounded by people you would think who would be there to protect him, but in fact, were in many cases interested in separating him from all or part of his fortune and his power and none more prominently than first, a woman who became supposedly his fiancee. He gave her a nine-carat diamond ring, so I guess you could say they were although they never married. She moved into the mansion, she was his live-in girlfriend. Then you had another ex girlfriend who moved in too, so he had two women living in there with him, who's slowly but surely insinuated themselves first in his love life, then into his house, then into his will, then into his trust funds.

We've showed the scene and one afternoon they managed to isolate him from everyone and he wired in one afternoon $90 million, so that's 45 million each. They ultimately walked out of there with over $150 million. But they were slowly but surely taking over his life and came very close to take over the company, something I don't think most people realize. When Sumner was in the hospital, he was in the emergency room and he was in serious shape, one of the nurses who've been caring for him at the house when Shari came to see him pulled her aside and said you should know what's going on here. He started emailing her.

She started getting reports of how he was being treated inside the house and though they were very painful, it was so painful, she told him not to send anymore, to send them to her son because she couldn't bear to read them. But that's when she realized that she couldn't just isolate herself and sit by while the family legacy and fortunes and everything her father had worked for got siphoned away by these people preying on him. It wasn't just the women. It's other executives, advisors, lawyers, it's very instructive tail. There were suits alleging it was elder abuse. I think if something many people with aging parents, especially if they have some resources, can relate to, the efforts of many people to take advantage of wealthy people in their declining years.

Catie Peiper: That really spoke to me a lot. Again, as you mentioned at the very top of this, he's not the most sympathetic figure through a lot of his career, but when he starts falling prey to some of these other manipulators, you just can't help but feel sorry for him. My follow-up to that is there was this very interesting inner play between sometimes they had to make the arguments that Redstone was very competent, that he was able to make his own business decisions when it came to the boardroom. But then at the same time, there were these very interesting legal suits where they were trying to retrieve that money that he had given away. I'm curious if there are lessons that you would take about how we have to treat these very interesting financial dealings.

Rachel Abrams: Well, I think that if the law treats mental competency as very black and white, you're either competent and capable of making your own decisions or you're not. Anyone that's had to take care of a loved one who is starting to get older and maybe can't totally care for themselves understands that there's a lot of gray area there. I really feel like people will be able to relate to that aspect of the story in the sense that you want someone that you love to be autonomous and to live a dignified life, but you also don't want them to get behind the wheel of a car and kill themselves or kill somebody else.

I think what you see in the story is that if it suited people to argue that Sumner Redstone was incompetent that's what they argued. If it's suited people to argue that he was competent, that's what they argued. It goes back to one thing Jim and I have remarked a lot about over the course of this book is one of the big takeaways is who you surround yourself with at the end of your life. As corny as it sounds this book is really about the friends and relationships and people that you have. If there's ever a story, money cannot buy happen, I can't say that enough, I probably already said it in this interview. But if my money cannot buy happiness and this really embodies that.

James B. Stewart: Donald did they say if it was in their interests that he was competent? If that situation changed, they just turned on a dime and said, oh, yeah, I know three weeks ago I said he was perfectly Lucid and competent, but now he's completely incompetent. I mean, they just shamelessly shifted their position to frankly line their own pocket books. I think you're touching on a very important issue here in the theme, and is something I'd like to see the bars, the legal profession take up this issue because the system isn't working, this black-and-white thing is, as Rachel describes it, it's too legalistic, it's not the real-world.

We got a confidential, thorough psychiatric evaluation of Sumner Redstone, and we reported a lot of that in the book. If known what southerner was like it as peak when he could learn Japanese in no time, he crack the Japanese codes in World War 2. He graduated from Harvard in three years. Whatever else you want to say about, and get a brilliant line. By the time he was in his '90s, he was fading. He couldn't perform simple tasks, you read that, and you realize why he would have been so vulnerable, and in fact, what do you want to call it, legally competent or not competent? He he was vulnerable, and you see that play out. It doesn't matter what the law said he was being taken advantage of.

Catie Peiper: I think that's a really interesting dichotomy between this question of his competency later in life, when they're early reports of him doing irrational things when people would have argued he was very competent. The anecdote EU-related of him removing tom cruise off of paramount because his girlfriend didn't like how he was jumping on the sofa on his famous Oprah interview. I think I would like to say as a rational human being, I'm not certain that that checks the rational box, and so I think it's very interesting how these irrational decisions earlier in life are just brushed aside as the whims of corporate leaders, but then when it's convenient later in life, suddenly we had that legal debate. Did you see a similar trends. Sorry, go ahead.

James B. Stewart: Sorry. I think your point is something that is an important issue here that when you see someone like Sumner Redstone who is so rich, and he has so many hangers on telling him what he wants to hear. People like that don't recognize normal boundaries, the things that would give other people pause, he just went right ahead and did weather that was putting a girlfriend on TV whether there was a small anecdote that sticks in my mind where he called a reporter, and tried to get him to reveal a source and the reporter recorded the conversation, wrote about it, and his PR person came in and said, what are you doing here? Why did you do that? Sumner said, no, I never did that. I never said anything that. The PR said Sumner it's on tape, he has it on tape, and then Sumner says, well then just deal with it, get rid of it, do something. He just bends the reality to whatever you wanted it to be at the moment. Now I think we all know some other people like that, and positions of power and prominence, but he is a very vivid example that, and that is when he was at his peak.

Catie Peiper: I think that's a really good point about people in positions of power because it seems throughout all of these narratives, we have people who ended up getting their come up, and set the end, whether it was Redstone or Moonves, and then others like red stones live in girlfriends who seem to have gotten away without any repercussions.

Rachel Abrams: Yeah, they meet up with at least $150 million total. By the way, $45 million was wired to each of them in one day, 90 million total. As we detailed in the book, there are institutions that are all too happy to take their money and have them sit on their boards, and have them fawn them as philanthropists, and it does not seem that any of these institutions to which like Sydney Holland is donated money in the aftermath of all of this, has been at all interested in inquiring what exactly went down at the house of Redstone. Nobody seems particularly interested in whether these women were abusive to him. It just goes to show you that really money can buy a lot, including forgiveness, and memory.

Catie Peiper: But not happiness as we talked about.

Rachel Abrams: Not happiness. Everybody needs to remember not happiness.

Catie Peiper: Going back to the boardroom dealings, I do have one question for you. We saw recently that Paramount released as 630 million dividend, and it's not something that a lot of the other streamers are doing. Disney's not doing it, Warner Brothers isn't doing it. Do you think that with some of these larger personalities out of the boardroom now with the new members that Shari has brought in, do they have more skin in the game? Are they being more conservative with their programming and business choices now, then maybe they would have under a Mogul CEO like they did in the past?

James B. Stewart: Look I don't know every single program that they're producing. But I would say that in contrast to say the Murdoch Empire, which is going to close, you identified with Fox News. The Redstone family has never been overly political or tried to push agenda like that. I mean, Sumner had some troubling political views to put it mildly, which emerged in the book, but they didn't necessarily at all show up in the programming. What somebody wanted to do was win. He wanted to be number one on the ratings, he wanted to make money, he wanted to track big audiences, and I think that was what really motivated him. Now, today in a company like Paramount Global and many others, by the way, that are controlled by a shareholder who doesn't own majority of the actual shares.

You're going to have tension between the regular shareholders, and somebody who has voting control, and maybe has a much more sizable stake. One of those tensions might be, how do you deploy cash? Do you invest more in the business? Do you provide more dividends? When you have very large shareholders who need an income stream, and that's not necessarily true in the Redstone case, but their interests are going to be different from the average person who just owns a few hundred shares, so there's constant debate about that, and corporate governance circles. But the simple answer is when shareholders by these companies, they know that there is a controlling shareholder, and that these tensions may surface or they should know.

Rachel Abrams: When you said conservative, I immediately thought that you meant conservative just in terms of content, not politically, and I was going to say, there's literally a show on TV called MILF Manor, which was a premise first show, a joke show on 30 Rock Lake was like a fake show that is now actually on TV. They just did a jersey shore were union, so I was going to say that I think it's more of like a race to the bottom. I'm giving you two answers, one of which you didn't actually.

Catie Peiper: No because I did mean both, so I appreciate that. Well, this has been great, and I really appreciate you guys talking with us today. Again, we've been talking to James Stewart and Rachel Abrams about their new book, Unscripted. Thank you guys for joining us again.

Rachel Abrams: Thank you so much.

James B. Stewart: It's pleasure.

Chris Hill: As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. I'm Chris Hill. Thanks for listening. We'll see you tomorrow.