Date: 5.13.2002
No matter what happens to Mel Karmazin, Shari Redstone will become a force to be reckoned with at her father's media empire.
Sumner Redstone, the chairman of Viacom, simply doesn't intend to die. Even Mel Karmazin, Redstone's No. 2--and of late his combative adversary--jokes that Viacom's 79-year-old controlling shareholder is "good for another 30 to 40 years--at least!"
But someday Redstone will leave the $23 billion (sales) media and entertainment empire he built, and when he does the spotlight could shift to a new character. Not to Karmazin, who sold CBS to Viacom and is a cost-chopping supersalesman beloved by Wall Street, but to a rising star whom Redstone describes as his clone: his 48-year-old daughter, Shari Redstone. "Nobody in the entertainment industry is rising as fast as Shari," Sumner says. "It's like father, like daughter: She has no major weakness. She is a great businesswoman."
Shari is at the moment the president of National Amusements, the $600-million-a-year theater chain founded by her grandfather and rebuilt, brick by brick, by her father. National Amusements is the vehicle through which Sumner Redstone controls 68% of the voting stock of Viacom (which owns, among other things, MTV and Paramount Pictures). That stock and the family's nonvoting shares are valued at $10 billion. Besides running the theater company, Shari sits on the board of Viacom, and she makes no secret of her plans to be more involved with Viacom. "Viacom is an extremely significant asset of National Amusements," she says. "I'd like to take a larger role."
This can't be too pleasing to Karmazin, 58, the COO, whose contract expires at the end of next year and whose frictions with Sumner Redstone are the subject of periodic speculation in the press. Shari Redstone began sitting in on Viacom budget meetings the year before Karmazin arrived in 1999. It rankled the former CBS chief, who demanded that she stop attending. She complied. "There are meetings for management, and there are meetings for the board," Karmazin says.
Shari Redstone dismisses any notion of a clash with Karmazin. She says that she has "absolutely no desire" to ever become Viacom's CEO. "I can do whatever I need to do as president of National Amusements and a board member of Viacom."
Her father likewise says that Shari won't become CEO and that they both believe in "professional management." (Doesn't her job running a $600-million-a-year business count?) Either way, Shari will one day wield enormous influence over Viacom. She is now immersing herself in Viacom to learn everything she can. She spends two days a week in New York, working on joint projects between National Amusements and Viacom and making an effort to get to know Viacom's executives. If Sumner Redstone died suddenly, Karmazin's contract says that he would become the boss. The Redstone stake in Viacom would go into a trust run by Redstone's confidantes; they include Philippe Dauman, George Abrams and Shari herself.
As her father did, Shari embarked on what she thought would be a lifelong legal career after earning a bachelor's degree at Tufts University in 1975 and degrees in law and tax law at Boston University. She married in 1980 and worked a few years in Boston as a defense lawyer, then quit to raise her three children.
Cut to 1994: Her children older and her 12-year marriage (to a lawyer turned rabbinical scholar) ending in divorce, she tiptoed back into a career. Her father encouraged her to work a couple of days a week at National Amusements' office in Boston, Massachusetts, just to get her bearings. She thought that it would bore her, but within six months she was hooked and had won acceptance in the ranks. She says of her famous last name: "Doors can open easier, but they can slam a lot faster, too."
Today she reflects the tussle between traditional mother and corporate chief. She wears gray power suits, is a two-fisted negotiator and is described even by fans as a steel fist in a velvet glove. "Some people negotiate for a win-win deal. Shari only cares if she wins," says one rival who has had to bargain with her. Yet Shari Redstone also says, "My kids are my life." She feels guilty if she can't cook for them every night. She began focusing harder on Viacom, she says, only after her children grew more independent: her 20-year-old daughter is now away at college and her 18-year-old son goes to college in the fall, which leaves only her 16-year-old son at home. When she joined the privately held National Amusements in 1994, the industry was in a building frenzy driven by growing box-office receipts, cheap money and a belief that bigger is better. Shari doubled her chain's total number of screens to 1,400 but in the U.S. intentionally avoided moving beyond its 12 core markets in the Northeast and Midwest. The aim is to dominate a market with multiple outlets rather than to spread out broad and thin.
National Amusements seems to be thriving at a time when once luminous names like Regal Cinemas, United Artists and Loews Cineplex have all made visits to bankruptcy court. National Amusements takes in $270,000 per screen in box office receipts, compared with a nationwide average of $237,000.
She also expanded into Chile, Argentina and Britain and, in the U.S., retrofitted theaters with up-to-date features such as stadium seating. Unlike most of its rivals, National Amusements owns most of the land under its theaters, granting it cost savings, flexibility and speed to build.
"She exceeded my highest expectations," Sumner Redstone says. "In a very difficult period of time, she did better than anyone else in the industry." She may even have found a way to keep moviegoers happy when the film they see is a dud. The Bridge in Los Angeles is a widely acclaimed, space-age theater where the movie itself is almost an afterthought; customers get reserved seating in cushy leather seats, live performances onstage before a film begins and an "elite services" desk akin to a concierge desk in a posh hotel. Shari says that she was involved in every aspect of the design.
In her role as a Viacom director, Redstone says that she would like to see the company make more acquisitions to further strengthen its content offerings. That could mean a film library such as mgm's for Viacom's cable channels or some European assets picked up at low prices.
Viacom's range of businesses, however, is vastly broader and more complex than anything at National Amusements, and Wall Street may have some doubts about her abilities. "She wouldn't even make the short list at another media company," says Albert Greco, a professor at the Rutgers Business School.
Sumner Redstone and Mel Karmazin have agreed to postpone the topic of succession until year-end, but even now Redstone can't resist throwing a jab at him. After listing the superlatives of his most talented executives at Viacom--failing to mention Karmazin at all--Redstone says, "I don't know what Karmazin's plans are. He might want to retire." Karmazin shoots back: "I have no plans of retiring. Never!" Chances are that he won't stay at Viacom. Even as Shari tries to quell speculation, she can't quite kill it. "Anything is possible," she says. "Who would have thought ten years ago that I'd be sitting here running National Amusements?"
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