Sumner Redstone’s National Amusements

A family battle which includes allegations of trustee misconduct is reported in Geraldine Fabrikant, Family Laundry Redux, NY Times, Nov. 21, 2006.

The latest family member to tangle with Sumner M. Redstone, the Viacom chairman, is Michael Redstone, his nephew. He is suing both Sumner Redstone, 83, and his own father, Edward Redstone, 78, saying they cheated him and his sister, Ruth Ann, out of their rightful interests in the family company.

At stake is some $4 billion, the value of a roughly 50 percent interest in Sumner Redstone’s National Amusements, the movie theater company that in turn owns controlling shares in Viacom, CBS and Midway Games.  * * *

According to the lawsuit, Edward and Sumner Redstone held stakes in National Amusements in the early 1970s. Michael Redstone, 48, charges that he and his sister were cheated out of their interest in two steps. In 1972, when Sumner Redstone bought out Edward Redstone, his brother kept the proceeds from the sale of his children’s stakes for himself, the suit contends.

Then in 1984, when Sumner Redstone bought out the remaining shares held by Michael Redstone and Michael’s sister, he did so at a depressed price, and had a conflict of interest because he was a trustee for the National Amusements trusts as well as chief executive of National Amusements. The suit contends that Samuel Rosen, then the accountant for National Amusements who was told to prepare a valuation of the company, also had a conflict because he worked for Mr. Redstone.

According to the lawsuit, Michael Redstone first learned of his father’s and uncle’s self-dealing in a suit that his own father brought against him two years ago in Middlesex Probate Court.

In that case, Edward Redstone charged that his son was not entitled to trust-fund money he had claimed after the death of Edward Redstone’s grandson, Gabriel, who was killed in a car accident.