Sumner Redstone Essay, Research Paper

Sumner Redstone

At age 76, Sumner Redstone is deemed by writers and critics to be one of the most powerful men in the entertainment industries. CEO and chairman of Viacom, Redstone owns over $9 billion worth of the company?s stock, who in turn controls all of Paramount Industries. He also owns over $1 billion worth of stock in National Amusements, his privately held theater chain. Although Redstone has made more money from the entertainment industry than anyone else alive, it has been a difficult road to the top.

Born Sumner Murray Rothstein in 1923, he lived in Boston?s largely Jewish old West End in a poor tenement that lacked a bathroom. His father, Michael Redstone, born Max Rothstein, sold newspapers on the streets and later became a salesman of linoleum out of the back of a truck. He eventually broke into the nightclub business, buying Boston’s Latin Quarter from Lou Walters, father of Barbara Walters. Michael Redstone also opened the third drive-in theater in the United States and expanded it into a small chain of drive-ins that flourished in the early years after World War II.

Like a lot of bright Boston boys who lacked family connections, Redstone was accepted at Boston Latin School, the oldest and possibly toughest public school in the country. He headed the school debating team and won all the academic prizes for his class. He entered Harvard at 17 and finished in 2 1/2 years, becoming fluent in Japanese and proficient in Latin, French and German.

Professor Edwin Reischauer, the Japanese scholar who later became ambassador

to Japan, selected Redstone to join him in an elite Army code-cracking team during World War II. He became part of the group that broke the Japanese military and diplomatic codes. After the war he entered Harvard Law School and graduated in 1947. That year he married Phyllis Raphael at age 24.

Redstone?s first business adventure was buying pens, tools, and other military surplus cheap using his GI discount and then selling them to local department stores for a $10,000 profit, equivalent to $80,000 in today?s money bracket.

One of his law professors, Archilbald Cox-who later became a special Watergate prosecutor, arranged a clerkship for Redstone in the U.S. Court of Appeals in San Francisco. In 1951 at age 28 he became a partner in the Washington law firm of Ford, Bergson, Adams, Borkland and Redstone. With a thirst for competition, Redstone left law in 1954 and went into business with his father and younger brother Edward in the family’s chain of 12 drive-ins in the Northeast.

National Amusements Inc., then called Redstone Management, was at war for control of first-released films. Redstone acted as a pioneer. First he personally litigated and won a case that forced the studios to give drive-in theaters the same access to first-run movies as indoor movie houses had. Then, realizing the public wanted more options at theaters, he coined and copyrighted the name Multiplex and helped popularize these cinemas in urban areas. With Sumner gradually taking over National Amusements, the chain grew from 59 screens in 1964 to 129 in 1974. He was now a wealthy man respected in the motion picture industry, but scarcely a national figure.

In 1979 Redstone was caught up in a fire in a Boston hotel. He is said to have saved his own life by clinging to the outside window ledge of his third-story room by his hands, counting to 10 over and over again. Despite 60 hours of burn surgery, doctors doubted he would ever walk again and were worried that shortly he would lose an arm to infection. Twenty-one years later, Redstone is hindered only by a loosely hanging right arm and a gnarled hand with purplish skin.

While watching the screening of Star Wars, Redstone rushed out to a pay phone to by 25,000 shares of Twentieth Century Fox because he was so impressed. He later bought stakes in Columbia, MGM/UA and Loews to gather up the funds needed to launch his leveraged buyout bid for Viacom, then a little known cable, broadcast and syndication company controlling such networks as MTV, Nickelodeon and The Movie Channel. Redstone seized control of the company for $3.4 billion in a bitter takeover war that forced him to raise his offer three times.

With his purchase of Viacom in 1987, Redstone, 63, had finally become a national figure. The buying of Viacom had put him in serious debt, but immediately profits started to show. At an age when most people are thinking of retiring, he was revving up for the next stage in his career: the purchase of Paramount Communications.

For 4 years Redstone had pondered the takeover, holding fitful talks with then Paramount chairman Martin Davis. Until September of 1993 nothing had been compromised. When Paramount finally did come up for sale, a rival bidder Barry Diller, owner of QVC, had made a generous offer that Viacom couldn?t compete with. Redstone?s response was the $8.4 billion purchase of Blockbuster Entertainment, who in turn said they would kick in $1.25 billion into Viacom, allowing Redstone to outbid Diller. In taking over Paramount for $8.2 billion, Redstone had created his multimedia giant.

At 76, it appears that Redstone will run his company for as long as he likes. He controls 67 percent of the voting stock and 28 percent of the shares outstanding at Viacom, which owns the Paramount movie and TV studios; the MTV, Nickelodeon and VH-1 cable networks; Blockbuster; ShowTime Networks; 19 TV stations; half the UPN network; Simon & Shuster consumer publishing; Paramount theme parks; and 80 percent of Spelling Entertainment. This is not to mention the ownership of National Amusements where his 40-year-old daughter, Shari, has taken over as his number two.

Redstone gets up by dawn most mornings to check the movie grosses. He reads the paper while running three miles on a treadmill. After squeezing in a game of tennis, the rest of the day is filled with Viacom. Even during weekends and vacations, Redstone can?t keep his mind off of the company-making phone calls religiously to get pertinent information. It seems there is no line between work and play. ?Viacom is me,? Redstone says. ?I?m Viacom. That marriage is eternal, forever.?

Sources

Broadcasting. ?Sumner Redstone: A Drive to Win.? 14 Nov 1988. v115: p103.

The Economist. ?Another Fine Mess: Paramount, et al.? 15 Jan 1994. v330: p69(2).

Greenwald, John. Time. ?The Man with the Iron Grasp.? 27 Sept 1993. v142: p74(3).

Gunther, Marc. Fortune. ?Viacom: Redstone?s Remarkable Ride to the Top; Sumner

Redstone Led a Revival at Blockbuster Video, Silenced His Critics, and Became the Richest Mogul in Entertainment.? 26 Apr 1999. v139: p130.

Matzer, Marla and Robert Lenzner. Forbes. ?Winning Is the Only Thing.?17 Oct 1994.

v154: p46(2).

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