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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."