2 old media titans still thrive

CBS/Viacom's Redstone, News Corp.'s Murdoch recall moguls such as Hearst and Paley

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September 21, 2006|By Thomas S. Mulligan, Charles Dug and Claudia Ella | Thomas S. Mulligan, Charles Dug and Claudia Ella,Los Angeles Times

They are sons of strong women. Both have sparred publicly with their heirs, both are plotting to conquer China, and both seem to view immortality as their best succession plan.

But what really unites Viacom Inc. Chairman Sumner M. Redstone and News Corp. Chairman Rupert Murdoch is that, to a degree almost unknown today among heads of U.S. public companies, they can do as they please.

Redstone and Murdoch are part of a line of autocratic media titans stretching to CNN founder Ted Turner, William S. Paley of CBS, Henry Luce of Time Inc., newspaper baron William Randolph Hearst and such lions of early Hollywood as Louis B. Mayer and Adolph Zuken. Their power derives not just from their dominant stakes in the companies they've built but also from their inclination to use it.

"The amazing thing is that when Rupert says, `Let's do it,' everyone drops everything to focus on whatever he wants," said one News Corp. executive. "It's like an army that can turn on a dime."

Today, as the digital revolution is overturning old-media business models and new threats and opportunities are materializing at video-game speed, a leader's ability to act boldly and unilaterally - without having to consult lawyers, directors or Wall Street in advance - can be a powerful advantage.

When Murdoch decided to make his move into new media, he didn't order up strategic studies but took the company checkbook in hand and spent $2 billion on acquisitions, sometimes holding talks without top executives in the loop.

"There's a huge difference between executives who rise up through the ranks versus a founder-executive in terms of personality and style," said Lillie R. Friesland, a psychologist in Century City who advises business executives on strategies, collaborative skills and succession issues.

Because these individuals are excruciatingly possessive about what they've built, she said, they never can let go, even in their waning years.

"I am Viacom," Redstone, 83, said in a recent interview. "My life is Viacom and it continues to be Viacom. I live the company that I built from three drive-in theaters," a business he inherited from his father. He controls about 70 percent of the voting shares of Viacom and of CBS Corp., which was split off in January.

Redstone's latest display of owner's prerogative came this month, when he abruptly fired Viacom chief executive Thomas E. Freston, the 26-year cable veteran he'd chosen less than a year earlier to run the company after the CBS split.

The Freston ouster came two weeks after Redstone had publicly cut Paramount Pictures ties to its top movie star, Tom Cruise, saying the actor's erratic behavior was costing the Viacom film-making subsidiary money.

Both actions show that Redstone "wants to raise his profile and show he's in command," said Neal Gabler, who has written extensively about Hollywood and is a panelist on News Corp.'s Fox News Watch.

In defiance of his age, Redstone shows the kind of restless energy that an Olympic athlete might envy. What drives him, those who know him say, is a competitive fire that gets kindled by such things as his rivalry with Murdoch, 75.

"People have said that [Murdoch] takes gambles more easily than I do, but I'm not sure that's true," Redstone said. "I would say we're very much alike."

Murdoch seldom grants interviews and was not available to comment for this article, a spokesman said. Redstone, however, talks freely with the media and seems to care deeply what is written about him.

Redstone grew up in Boston and graduated first in his class from Boston Latin School, the city's premier public high school. Finishing behind Redstone was Merton H. Miller, who won the Nobel Memorial Prize in Economic Sciences in 1990. Redstone went on to Harvard, finishing in three years.

Redstone was aided in his studies, and later as a federal prosecutor and a businessman, by formidable powers of concentration and a near-photographic memory. A favorite Redstone debating tactic is to recite his opponents' words back to them in perfect detail weeks or months after they were spoken. "It was really unnerving," said a former Viacom executive.

Redstone seems to thrive on adversity. In 1979, he survived a fire at Boston's Copley Plaza hotel by hanging on to a window ledge, suffering severe burns that left his right hand mangled and his legs with such poor circulation that he is forced to wear support hose to this day. He likes to say the biggest milestones of his career - his purchases of Viacom, Paramount Pictures Corp. and CBS - occurred after that fire.

Critics of Redstone's business vision say he is more opportunistic than strategic, gravitating toward certain deals because they are available rather than because they fit with an overarching plan.

"I think Rupert is a better businessman," said media investor Morris Mark, whose Mark Partners owns 700,000 shares of News Corp. and none of Viacom. He described Viacom as "mature," growing at 5 percent to 8 percent annually, while News Corp. could grow at a rate of 12 percent to 18 percent.

Murdoch, by consensus, pays far less attention to Wall Street, although his ownership stake - about 30 percent - is less dominant than Redstone's.

"He thinks News Corp. isn't a public company as much as it's his company," said Bill Mechanic, former head of Murdoch's 20th Century Fox studio and now CEO of Pandemonium Films. "He thinks he knows more than everybody else."

Thomas S. Mulligan, Charles Duhigg and Claudia Eller write for the Los Angeles Times.

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