Sumner Redstone, who died Tuesday at 97, built a sprawling media empire out of the movie theater chain founded by his father, Michael Redstone. It's now his daughter's decision whether she wants to keep it.
The Redstone family holding company, National Amusements Inc., owns 79.4% of the Class A voting common stock of ViacomCBS — the owner of cable TV networks, Paramount Pictures, Simon & Schuster and the CBS broadcast station. Eighty percent of NAI's voting interest was controlled by Sumner Redstone.
That now goes to a seven-person trust that puts Sumner Redstone's daughter, Shari Redstone, in charge of the company. The trustees are Shari Redstone, her son Tyler Korff, David Andelman, Norman Jacobs, Leonard Lewin, Tad Jankowski and Jill Krutick. Shari owns the other 20% through a separate trust.
ViacomCBS has an enterprise value of about $35 billion and a market valuation of about $16 billion. That may sound large, but in today's world, ViacomCBS is competing against behemoths.
Comcast, owner of NBCUniversal; AT&T, owner of WarnerMedia; Disney and Netflix all have enterprise values well over $200 billion. Amazon tops $1.5 trillion, and Apple is closing in on a $2 trillion market cap.
A series of legal maneuvers and corporate filings in 2016 paved the way for Shari Redstone to take over for Sumner as the decision-maker for National Amusements' controlling stake in ViacomCBS. But it remains unclear if Shari has the same empire-building aspirations as her father.
You don't have to be a math major to figure out something went wrong with that deal, given ViacomCBS' value in 1999 was higher than it is today. The company split into two — Viacom and CBS — in 2006, which, in hindsight, seems like a mistake. While CBS flourished under CEO Les Moonves, Viacom eventually floundered, as MTV, Comedy Central and VH1 lost cultural relevance through the 2000s. Both companies found themselves undersized in recent years, eventually culminating in a December merger that reunited them as ViacomCBS, with Shari Redstone's blessing.
Shari Redstone pushed Viacom and CBS to merge and has had her eye on getting even bigger, according to people familiar with her thinking. But ViacomCBS' next target is unclear, especially as long quarantines and 10% unemployment erode traditional TV advertising dollars while pushing audiences toward less expensive streaming options. ViacomCBS is moving ahead with its own streaming ambitions, adding content to the already existing CBS All Access and officially rebranding it in early 2021.
Being a mogul may not be Shari Redstone's raison d'etre, though she's arguably the most powerful woman in media. She co-runs a small media venture capital firm called Advancit with her son-in-law, Jason Ostheimer. Still, Redstone fought for years to reclaim ownership of the business after a series of estate changes threatened to cut her out.
"I really respected how she got control back of the company, which at the time was not being run very well, to be honest," former Viacom board member and current New England Patriots owner Bob Kraft said in a CNBC interview last year. "She's gone through some difficult situations and really handled it beautifully. I don't know that a lot of people could do it and succeed and have the mental toughness and fortitude."
Her mission to grow ViacomCBS can take several paths. She can continue to acquire smaller businesses, such as Discovery, Univision, LionsGate, MGM, AMC and other smaller media companies. But even if ViacomCBS were to buy all of those businesses, a feat that would take many years with potentially painful integrations, the combined company would still likely be significantly smaller than Disney, Comcast, AT&T, Amazon, Netflix and Apple.
She can try to merge ViacomCBS with a company like Sony Pictures, a deal that could be structured so that Redstone hands over control of ViacomCBS equity to Sony over time.
Or, she could simply sell ViacomCBS to a larger player looking for more content in a world where only so many large streaming services can survive and flourish.
While Shari Redstone has effectively been in control of Viacom and CBS for several years, her father could still communicate through an iPad. He had continued to express desires on corporate decisions, such as opposing a deal to sell a portion of Paramount in 2016.
His death fully transfers decision-making authority to Shari. If selling ViacomCBS is the end game, that concept probably became a lot more feasible with her father's passing.
Correction: This story has been updated to reflect that Sumner Redstone died Tuesday and that although he built National Amusements into a media empire, his father, Michael Redstone, founded the company.