The Man with the Iron Grasp

By John Greenwald

In the most desperate moments of his life, a severely burned Sumner Redstone saved himself by clinging to a window ledge with his right handand counting to 10 over and over again as flames swept through his room in a Boston hotel fire. "My legs were burned to my arteries," he recalls. "I got to a window, and it wouldn't open. I got to another one and hung by my hands. It seemed like a lifetime." Despite 60 hours of burn surgery, doctors doubted that Redstone would ever walk again. His tendons were destroyed, his little finger partly amputated. Yet 14 years later, he not only walks but plays tennis with a ferocity that unnerves his opponents.

That relentless will to survive and conquer has now led Redstone, 70, the chairman of MTV-owner Viacom Inc., to launch what could be the business coup of a lifetime. At an age when most executives are thinking country clubs and conferences, Redstone last week engineered an $8.2 billion offer to acquire Paramount Communications for $69.14 a share in cash and stock and thereby create one of the world's media giants.Since Redstone would hold 70% of the voting stock of the combined company, he would have majority control of more movies, books and television shows than any other media mogul--unless Ted Turner, Barry Diller or one of the other rival suitors now circling the Paramount building comes forward and derails the merger (see box).

Redstone, a rags-to-riches tycoon who is worth about $4 billion, has always sought to crush all comers -- from rivals who might try to bust up his latest deal to weekend tennis partners. On the court he uses a special leather strap that wraps around his scarred right hand to enable him to grip the racquet. "He is the most formidable competitor I've ever had," says Alan Friedberg, a retired chairman of Loews Theater Management Corp. In one tennis rally, Redstone demanded to know whether his ball was in or out. "He had to know, even though we were just hitting," Friedberg recalls with lingering wonder. "It happened to be out, and I told him. He insisted it wasn't. We were rallying, mind you. I was stunned."

Off the court, Redstone wears nondescript suits and owns the same three- bedroom home in Newton, Massachusetts, that he and his wife Phyllis paid $42,000 for 35 years ago. He favors the less fancy Pine Brook Country Club in nearby Weston over the prestigious Longwood Cricket Club in Brookline. He spends weekdays in Manhattan's Carlyle Hotel to be near Viacom headquarters. Often rising at 5 a.m., he reads the morning papers and then works out on a treadmill while watching TV. His days last up to 18 hours. "I live modestly," Redstone says. "Possessions don't count. Achievement counts. Winning counts."

Just who is this ultracombative billionaire who happens to be the grandfather of the MTV generation?

Born Sumner Murray Rothstein in Boston's largely Jewish old West End, Redstone was the elder son of a businessman whose nail-biting Depression-era ventures included selling linoleum from the back of a truck, working as a liquor wholesaler and eventually owning two nightclubs and a restaurant. "People think I grew up rich," he recalls. "I grew up in a tenement." From childhood on, "I always had to be the best at what I did. My mother was a big influence. When I used to practice the piano, she would turn the clock back on me," forcing him to practice longer. His father, says Redstone, was a "street kid" with little formal education and a central "need just to survive," which made his household a place where error and failure were not easily tolerated.

Redstone sharpened his competitive instincts at Boston Latin School and then whizzed through Harvard in three years. "Harvard was like going to kindergarten after Boston Latin," he recalls. The public prep school was "tough, almost cruel. The competition was vicious. But the cruelty was not discriminatory. It only had to do with excellence." He graduated first in his class at Boston Latin, a feat he calls "the primary educational achievement of my life."

At World War II Harvard, Redstone's gift for foreign languages caught the eye of Edwin Reischauer, a future U.S. ambassador to Japan, who picked him to join an Army intelligence unit that cracked Japan's wartime codes. Redstone entered Harvard Law School after the Army and began to use his business skills to earn spending money, buying pens, tools and other merchandise with G.I. discounts and selling them to local department stores for a profit. "My children ((Brent, 43, and Shari, 40, both lawyers)) will never have the benefit of that experience, and it is a benefit, let me tell you." Redstone practiced law for six years before deciding that "litigation is generally offensive to me. All that happens is dissipation of intellectual and financial resources."

Turning to business, Redstone joined his father's drive-in movie firm and built it into National Amusements, Inc., an 800-theater chain. "He'd drive me up a wall," says Friedberg. "He'd call the head of a movie company over a single movie in a single town. Saturday or Sunday, he didn't care. He'd do whatever he had to do legally to get the picture away from me." To ensure that he would have total control of his theaters, Redstone insisted on owning both the land and the buildings. He also was a pioneer: first, he personally | litigated (and won) a case that forced the studios to give drive-in theaters the same access to first-run movies as indoor movie houses had. Then, noting that audiences wanted a wider range of features, he helped popularize the multiplex cinemas that are now ubiquitous at suburban shopping malls. And with typical thoroughness, he copyrighted the name Multiplex.

In 1987 Redstone launched a bid to acquire Viacom, which owned the nation's 10th largest cable system as well as cable networks that included MTV, Nickelodeon and The Movie Channel. Although he knew nothing about cable television or rock videos, he knew they were stealing viewers away from movie theaters. At the same time, he recognized the burgeoning worldwide demand for home entertainment, particularly in the youth market. "A cable system to me was a wire in the ground and a thingumajiggy pointed at the screen," he says. "But I saw a vast technological and global revolution that would change the habits of people all over the world, and I saw Viacom at the center of it."

Gaining the prize was another matter. Redstone says all he knew about leveraged buyouts was that they were called LBOs; and Viacom had just proved it could survive a takeover attempt by raider Carl Icahn. When Viacom executives launched their own bid for the company, Redstone seized control of the firm in a bitter takeover war that forced him to raise his offer three times.

Redstone turned MTV into a global entertainment network that today reaches more than 230 million homes in 77 countries, making its name nearly as familiar as Mickey Mouse or Coca-Cola. No sooner had Redstone added Viacom to the fold than he began to prowl for a major movie studio. He held fitful talks with Paramount chairman Martin Davis over the past four years, but until last week none had come to fruition. Among other problems, Davis was also shopping for an acquisition after the failure of his 1989 bid for Time Inc., which threatened its merger with Warner Communications, and he was loath to surrender control of the company.

Redstone saw his chance earlier this year when Paramount's stock, which had hit a high of 66 3/8 a share in 1989, continued to languish after several years of up-and-down profits; it was trading at 56 3/8 at the beginning of this month. Meanwhile, Viacom class A stock climbed from about 49 a share in June to more than 65, boosted in part by acquisitions that Redstone made under a company stock-purchase plan. Davis also had to worry about a less friendly suitor trying to take over Paramount. "Martin heard footsteps," says a major Paramount shareholder. Davis compares the deal to "going back to your childhood sweetheart. Maybe she didn't look as attractive when you first dated, but you tried all the others and you came back."

Although Redstone insists that "Martin and I have been intimate friends for decades," some executive-suite watchers predict that relations between the two demanding men will be brutish and short, with Davis, 66, leaving the merged company. Yet while Redstone can explode with rage and send subordinates scurrying, he has never been a tyrant who issues orders from behind closed doors. He listens intently at management meetings, and subordinates say he encourages them to speak their mind. "He wants everyone in the room to kick the s--- out of an idea," says Tom Dooley, a close assistant. "That's his sanity check. If it survives, it's good."

Several years after his close-call survival of the hotel fire, Redstone could be heard occasionally brooding over the meaning of a career that had left him atop a heap of movie theaters. But with one of the world's largest media companies within his reach, Redstone seems to have banished his existential anxieties. The fire, he says, only scarred him physically. "I never felt bad," he explains. "I've had no nightmares. I think of it only at happy moments, like when I'm hitting the tennis ball."

With reporting by Sam Allis and John F. Dickerson/New York