We frequently point out to ‘business law' clients that business law – especially when it’s a family-owned business – almost never stands alone. Business law almost always crosses over into other disciplines. When it does, the issues have to be addressed as a whole; otherwise, we’re treating symptoms while missing the disease. Every once in a while, something comes up on the news or in the media that does a solid job of illustrating some small part of this, but usually, we rely on popular culture, which tends to make the point and is more entertaining than real life.
Succession Will Have an Ending
That’s why we were thrilled to discover that Succession will be back for its last season at the end of March. Our thinking is – as anyone who has been following our newsletters would guess – that Succession always plumps the depths, absurdly though accurately, of business law and provides far more lessons per insane episode than we can reasonably find in a single ‘real’ case.
A Real Succession Mess
So, we thought. Then, a few weeks ago, an instant best-selling book was released that touches (more like stomps) on issues of succession planning; corporate governance; elder law; fraud; unintentional disinheritance; breach of duty and trust; shareholder oppression; undue influence; contract disputes; sexual harassment; boardroom malfeasance; mergers and acquisitions; shareholder derivative actions; and more.
That describes Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy, as well as the last thirty years of Sumner Redstone’s life. Sumner Redstone, aged 70-97, was a daily law school final exam question brought to life.
A prominent book reviewer offers this [perfect] summation:
- A jaw-dropping yarn of how two publicly traded companies featuring an iconic movie studio (Paramount), the highest-rated broadcast network (CBS), dozens of local television stations and several popular cable outlets (including MTV, Comedy Central, Nickelodeon and Showtime), along with a prestigious book publisher (Simon & Schuster), fell victim to a rogues’ gallery of grifters, sycophants, incompetents and gold diggers who were empowered by a once-brilliant business tycoon’s damaged psyche and wanton megalomania.
It’s telling that the victims in that paragraph are the companies Redstone owned. Redstone – like Logan Roy – never made a succession plan. Unlike Logan Roy he had a perfectly solid reason for not doing so – he believed he had reversed the aging process.
One would think this belief would have raised alarm bells from everyone remotely concerned about the well-being of some of the nation’s most prominent media companies . . . or it would have popped up during the many deals – mergers, sell-offs, offers, etc. – that required oversight and due diligence.
How Not to Plan a Business
It did not – Redstone ruled with an iron fist. He put his controlling shares into trust but that just added the trust to the entities he controlled.
His megalomania (there’s no other word for him) combined with the aging he denied he was experiencing and a boatload of horrific personal decisions threatened markets, shareholders, and the livelihoods of thousands of employees. Most of it usually hidden from the public.
We’re plowing through Unscripted right now and we’ll have more to write about Redstone in coming newsletters and blogs.
For now, there’s this: while Viacom and CBS were discussing re-merging and the infighting on the Viacom board made the Hatfield-McCoy feud look like a friendly game of softball on the south forty, Redstone’s lawyers were in two courtrooms in two different jurisdictions.
In one, they were trying to prove he was competent when he removed his live-in (and much, much younger) girlfriend as a beneficiary of his trust and evicted her from their home. It should be noted that by the time he did so, she had absconded with somewhere around $150 million.
Meanwhile, his other lawyers were trying to prove he was incompetent when he removed several life-long friends from the board of Viacom, ceding control of the company to his estranged daughter.