Sumner Redstone's Ex Hits Back Against Shari Redstone In Latest Legal Salvo

Shari Redstone Manuela Herzer Split - H 2015
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Shari Redstone Manuela Herzer Split - H 2015

In the ongoing legal battle over Sumner Redstone's health, former girlfriend Manuela Herzer discusses the relationship between Redstone and his daughter Shari as well as gives more hints about how the media mogul's death could impact CBS and Viacom.

Herzer — thrown out of the 92-year-old Redstone's home in October — was granted the opportunity by the judge to have a psychiatrist examine Redstone in her bid to be re-appointed his health care agent. Additionally, in her effort to fend off a dismissal motion by Redstone's attorneys, she's also gotten the opportunity to depose his nurses and others.

The results of this discovery have mostly been redacted from an opposition to dismiss. Her court papers state "there is substantial evidence showing that Mr. Redstone lacked capacity and was unduly influenced" and that he "lives behind a black curtain in a home that he no longer leaves, with a fantasy life where is told he is having intimate relations that did not occur."

The most public bomb-throwing, though, come from Herzer's declaration and attached exhibits.

Herzer is fighting objections that her legal campaign amounts to a financially motivated intrusion of privacy — she was set to inherit $50 million and Redstone's Beverly Hills home, according to a recent filing — but Herzer contends she merely wishes to do what's best for her dear friend and frames Redstone as the one being manipulated by those now in his ear.

In particular, she takes aim at Shari Redstone less than two weeks after Sumner Redstone resigned as executive chairman of Viacom and CBS, replaced by Philippe Dauman and Leslie Moonves, respectively. 

Shari Redstone has made it known she doesn't like what Herzer is doing and has offered her own declaration in the case.

Herzer's latest declaration attempts to offer some context.

In 2014, according to Herzer, Sumner Redstone "was desperate to get Shari out of the company" and the two came close to a settlement with each other over Shari’s 20 percent share of National Amusements, the Redstone company that is a majority stakeholder in CBS and Viacom. According to the contemplated terms, attached as an exhibit, a new company called SERCO was to have been split off to focus on the foreign operations. What's more, it's said in this "term sheet" that Shari wouldn't become chairman of CBS and Viacom after her father's demise, but could remain as vice chairman and would need to disclose prior agreements "other than the written agreement with Les Moonves regarding the chairmanship of CBS."

Redstone was also allegedly worried that his daughter was going to sue Herzer and another girlfriend named Sydney Holland for gifts given to them. The term sheet allowed the girlfriends to keep the gifts with everyone involved signing mutual releases.

Besides a term sheet that says explicitly, "Sumner and Shari are not getting along," Redstone is said to have expressed "hostile feelings toward Shari" in other ways," including conditioning that he would only give her 16 cemetery plots in his will on the condition that she not directly or indirectly contest or attack the estate plan.

Herzer goes on to say that Shari's "supposed reconciliation with her father is a smoke screen," that she's attempting to now manipulate her father. 

Most notably, there's talk about how Sumner's National Amusements Trust — separate from his personal trust — is obligated to pay death taxes for him. Herzer asserts there are huge taxation implications if gifts go Herzer's way, as they were once scheduled to do.

"These would include capital gains taxes when National Amusements sold CBS and/or Viacom stock to create the cash for paying taxes," says Herzer in her declaration. "Then there would be a generation-skipping tax for a gift to me, and then another tax on Sumner's trust from which the gift was being made. The financial cost to National Amusements is a lot more than the money to pay the taxes. At the present time, stock prices of CBS and Viacom are severely depressed from a year ago, and the loss from forced stock sales to create liquidity due to the company's obligations to Sumner's estate would be substantial."

Herzer is alleging that if she were to get $70 million, it would actually cost National Amusements multiples of that figure, and this has become "sufficient motive [for Shari] to make sure that her father disinherited me and gave the money to a charity and not trigger any taxes or stock sales."

Of course, even factoring in the multiples and Viacom's depressed stock price, the media company has a $14.2 billion market cap at the moment so it's a little unclear how even a couple hundred million dollars of stock sales would create any crisis. Nevertheless, National Amusements selling off in the aftermath of Redstone's death could be something to keep on the radar.

A Shari Redstone spokesperson reacts, "Shari Redstone is not going to dignify today's baseless and mean-spirited attack on the Redstone family with any comment."