Sumner Redstone Health Care Fight Is Settled

Boston Beginnings
Christopher Patey

Redstone was born in a Boston tenement to a father who changed the family name from Rothstein to Redstone and built a regional movie-theater chain. After a short career as an attorney (he graduated from Harvard and Harvard Law), Redstone joined his father's company, National Amusements, in 1954. He became CEO in 1967 and steadily grew the company with profitable investments in studios.

After four months of wrangling, prying, concern and posturing, a bitter and unique dispute over the final days of influential media mogul Sumner Redstone is coming to an end.

According to sources, the parties involved in litigation prompted when the 92-year-old controlling stakeholder of Viacom and CBS threw his longtime companion Manuela Herzer out of his Beverly Park home have come to a definitive agreement.

The full terms are still being held tightly, but the deal includes a payout to Herzer, allows Viacom to remain in the hands of chief executive Philippe Dauman and will eventually designate Redstone's care to his daughter, Shari, who is set to take on a larger role at Redstone's companies after her father passes. For now, Redstone will still be in charge of his own health care. Attorneys for the sides haven't yet commented on the settlement, but a source close to the talks adds that the payout to Herzer will be substantial, but less than $70 million, and remove her permanently from Redstone's life. Shari is said to be instrumental in engineering the deal, which will be taken to a judge soon for approval.

The dispute was symptomatic of long-building tensions arising from internal Redstone family conflicts, young girlfriends eyed suspiciously and a huge fortune that awaits Redstone's heirs. When it spilled into open court in late November, upon Herzer's petition seeking to reclaim the role as Redstone's health care agent from Dauman, the feud tapped a business nerve given Viacom's sinking stock price and questions over future leadership. Herzer alleged that Redstone could do no more in his waning days than obsess over steak and sex, and Viacom and CBS shareholders soon wondered why Redstone was still commanding lucrative bonuses as executive chairman.

Herzer, who was set to inherit $50 million and his Beverly Park home, had her motives questioned for challenging Redstone's mental capacity to amend a health care directive. Gabrielle Vidal of Loeb & Loeb, the attorney for Redstone, has consistently framed the dispute as an invasion of his privacy. In turn, Herzer and her lawyer Pierce O'Donnell lobbed verbal grenades at Dauman for allegedly covering up Redstone's condition and at Shari for allegedly maneuvering into her father's life after years of tensions between the two.

In February, a judge refused to dismiss Herzer's petition and set up a trial scheduled for May that would have featured physicians offering their assessments of Redstone as well as talk about whether Dauman, Shari Redstone and others could truly take care of his needs. Both were scheduled to submit to depositions this week before settlement discussions advanced.

Now the sides have come to an agreement that will likely avoid what was sure to be an embarrassing trial for the Redstone clan. The next step will be informing the judge. Only time will tell whether this truly resolves the dynamics leading to a legal fight that tested the tough issue of geriatric care or whether it's all prologue to the potential trust battle that may erupt after the 20th century media titan passes the torch. 

Updated with more terms of the settlement.