Is Sumner Redstone Unintentionally Sabotaging Bonds Between Viacom, Paramount, DreamWorks and CBS?

Implications: 1. Sumner Redstone is known for forcing out executives  2. DreamWorks’ and Paramount’s bond may be unraveling  3. Family businesses have a low probability of surviving the third generation

Analysis: Sumner Redstone, Chairman of Viacom and CBS, is moving to sideline another from a long line of potential successors to his media empire, this time his daughter Shari. Mr. Redstone, who amassed his empire from a collection of Family owned cinemas, is known for forcing out executives.

Sumner dispatched the highly respected Frank Biondi, Viacom’s CEO, in the 90’s: The advertising guru Mel Karmazin left (was forced out) three years ago to run Sirius Satellite Radio after creating stellar growth in Viacom’s stock value; MTV founder Tom Freston was let go last September after just 14 months on the job.

The fight within the Redstone Empire is not unusual in family businesses. When it comes to issues of control and succession most family businesses have issues…Only 10% of U.S. family businesses survive the third generation. Sumner faces a formidable foe in Shari as she is every bit as tough, shrewd and competitive as he.

On top of the family and succession issues the DreamWorks/Paramount bond may be unraveling. After recent stellar successes of the two studios, there is a possibility that David Geffen and Steven Spielberg may walk in 15 months with the DreamWorks name as they both feel that Mr. Redstone has been ignoring them, thus aggravating earlier snubs and credit grabs at Paramount.