It's early November, during an especially brutal week for the economy and the media industry in particular, and there he is: the legendary mogul, holding forth at a glitzy New York charity dinner as if it were the best of times. "The market is off a little today, but Viacom is way up!" Sumner Redstone crows. Then he ­proceeds to indulge in one of his seemingly favorite pastimes, bad-­mouthing his rivals: "Disney is getting killed!" Now he's positively giddy. "News Corp. is down a lot!"

Redstone, who controls two of the planet's best-known media-and-entertainment conglomerates, Viacom and CBS, has just jetted in from Los Angeles on his long-range Bombardier Global Express, to be honored by a cancer organization with the help of his friend Bill Clinton. Enthroned at a corner table in the rococo vastness of Cipriani 42nd Street, the onetime headquarters of a defunct savings and loan, Redstone acknowledges a steady stream of acolytes, notably Viacom chief executive Philippe Dauman, CBS head honcho Leslie Moonves, and even crooner Tony Bennett. The scene around Redstone is an apparently warm family tableau that includes his petite 47-year-old second wife, Paula, and his pretty granddaughter Kimberlee Korff, a recent Cardozo law school graduate. Redstone is nursing a tumbler of cranberry juice, diet tonic, orange juice, and vodka.

"I have one of these every night," he informs me in his Boston accent, "because it's loaded with antioxidants. Every day at lunch, I have half a glass of red wine, a really good Clos de Vougeot burgundy. Tons of antioxidants!" He can't resist boasting, "I feel as good as I did when I was 20 years old!"

In fact, Redstone is 85 and facing a financial meltdown, his position on Wall Street measurably worse than his competitors'. Viacom's stock that day wasn't exactly "way up"-it was up more like 10 cents, to $18.87, a tiny uptick in a long and terrifying slide from December 2007, when it had peaked at $45. Ten days later, Viacom's price would dip below $12, a loss of more than 70 percent for the year. As for CBS-which Redstone had acquired nine years earlier for $37.3 billion-its market capitalization had plunged into the $4 billion range, a fall of about 75 percent from the previous year.

Despite a leonine intensity and improbable strawberry-tinged hair, he looks his age. His face is mottled; fleshy folds of neck skin sag over his knotted tie. He braces himself against the table to push his 6-foot frame into a more or less upright posture and, walking with a pronounced limp, cautiously makes his way to the press area to pose in his rumpled pinstriped suit with fellow honoree Brooke Shields-who towers over him in glamazon heels-before slipping into a curtained-off holding area to greet the former president. (View a slideshow featuring some of Sumner Redstone's famous friends.)

Even the loving family snapshot is a mirage. A long-simmering feud with his 54-year-old daughter, Shari-who is notably absent from the party-has flared anew over issues of power, money, and succession. In 1999, ­Redstone had installed her as president of the family's private holding company, National Amusements-he's the chairman and C.E.O.-which owns a 1,500-screen theater chain as well as controlling interests in Viacom and CBS. For years, he had indicated Shari was his heir apparent, but lately he has suggested she's not even a credible candidate, questioning her management decisions and telling me the two "don't always see eye to eye."

As for Paula-the former New York City public-school teacher with whom Redstone had had a widely publicized, storybook May-December romance-Redstone had just announced plans to divorce her after five years of marriage.

Even worse for a tycoon apparently obsessed with his image as a business visionary, National Amusements had stunned Wall Street just a few weeks before the dinner with a confession that it was in far worse shape than anyone had imagined-primarily because the shares it held in Viacom and CBS had collapsed with the rest of the market. A group of banks was demanding that National Amusements repay half of a $1.6 billion loan that it hadn't previously disclosed, so Redstone dumped a massive block of Viacom and CBS stock to raise cash and sold off a videogame company-into which he'd poured an estimated $800 million-for an embarrassing $100,000. Most humiliating of all is a recent news report's suggestion that Redstone might not even be a billionaire any longer.

Yet he refuses to acknowledge anything approaching failure, much less the prospect that he'll run out of time before he can reverse his fortunes. Redstone frequently claims that he looks like a man less than half his age, and he's open to the prospect of dating new women once Paula is out of the picture. "I intend to live forever!" he told me a week before the charity dinner, when I saw him at his home in Los Angeles. But surely he will someday die, won't he? "I won't! I'm telling you I won't!" he shouted, and it wasn't entirely clear he was joking. He compared himself with the title character of The Curious Case of Benjamin Button, the movie about an octogenarian who ages in reverse that was co-produced by Viacom's troubled Paramount Pictures. "Your headline," the old mogul suggests, "should be 'The Curious Case of Sumner Redstone.'?"

Maybe the more apt comparison is to King Lear. With his empire crumbling, his family fractured, his legacy in doubt, and his grasp of the true nature of his predicament not immediately evident, Redstone resembles a modern-day version of Shakespeare's tragic hero. Only this one has no plans to exit the stage. Because Viacom and CBS have a two-class stock structure, Redstone, despite his debt crisis, maintained his absolute power by selling only nonvoting shares and retaining 81 percent of the companies' voting stock through National Amusements. So while every other media conglomerate is suffering in the bad times, Redstone's continued authority has magnified the problems for his public shareholders. Wall Street has given a name to the phenomenon: the Redstone discount.

If it were anyone else, the spectacle of an elderly man flailing in the face of such a public shaming might inspire a sense of pathos. But Redstone's peers and competitors-even some of those he claims as friends-haven't exactly been rooting for him. He is widely derided as a megalomaniac who takes credit for everything and blame for nothing, regularly throws his employees under the bus to save his own skin, and seems to take pleasure in humiliating them. Revealingly, hardly any of Redstone's detractors are willing to be quoted on the record-a testament to his power. Those who publicly voice admiration often cite negative traits in the same breath. "There's something about Sumner that nobody quite understands," says former Disney chief executive Michael Eisner. "When it gets very tough, the bombastic quality disappears and the steely quietness takes over. I assume that's the state he's in now." David Geffen, who co-founded DreamWorks SKG and is widely said to despise Redstone (with whom he has skirmished over DreamWorks' fractious relationship with Paramount), sends me an email that doesn't exactly ring with sincerity: "I'm sorry Sumner is having difficulties at this time. It's a bad time for many people."

News Corp. titan Rupert Murdoch, for one, seems to be particularly enjoying Redstone's discomfiture. "Who would have thought a year ago that Sumner Redstone and his empire would ever have financial difficulties?" he recently gloated to one of his newspapers, Australia's Herald Sun. Acknowledging the widespread dislike of Redstone, Oscar-winning producer Arnold Kopelson, a member of the CBS board and Redstone's frequent dinner companion, says, "There's a bit of schadenfreude going on." A prominent talent agent trashes Redstone as "the most disliked man in Hollywood." A former Viacom executive calls him "a scumbag," while another claims he's "the most egocentric human being you could ever run across."

"There's a group of people he says are his friends," adds this former Viacom executive, "who would happily cut his heart out with a rusty knife."

Redstone's Mediterranean-style villa is a mansion by mortal standards, but no big deal in a neighborhood teeming with Versailles knockoffs occupied by the likes of Denzel Washington and Rod Stewart. The gated community of Beverly Park is a vertiginous climb from Sunset Boulevard, up a winding road that is itself chockablock with multimillion-dollar homes. After being cleared through the guardhouse by a uniformed private cop, I take a couple of right turns onto a tree-lined cul-de-sac, buzz No. 31, and wait for the gates to swing majestically open.

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A few seconds after I park my rental car on the concrete apron, an olive-skinned brunette wearing a black T-shirt and formfitting black jeans-ornamented by a massive skull-and-crossbones belt buckle encrusted with hip-hop bling-emerges from the front door. She bounds down the steps, between twin pools filled with koi, and offers her hand.

"I'm Paula," the future ex-Mrs. Redstone introduces herself. Her pending divorce had been splashed in the tabloids less than two weeks earlier, but she and Redstone are still living under the same roof.

She leads me into the high-ceilinged entry hall, where her husband-for-the-moment is standing and waiting, wearing an antic plaid sport coat. After I shake his gnarled right hand-nearly 30 years ago, Redstone barely survived a hotel fire that left his body badly scarred-he directs the Viacom public relations man to give me a quick tour of his adjoining study. "Why don't you show him the aquariums," he orders.

Redstone's lavish collection of exotic fish is a P.R. staple of any audience with the magnate. Massive tanks line the walls of the study from which he oversees his companies, the sea life floating languidly in eerie contrast to the manic energy of Redstone's daily telephone marathons with Moonves, Dauman, and his stockbroker in New York.

After the tour, I find the aging titan in his living room, poised against a backdrop of floor-to-ceiling windows with a commanding view of his money-green lawn and the canyons beyond. He sits in a straight-backed chair, uncannily alert, seemingly ready to pounce. "When you stop talking, I'll answer you," he says by way of interrupting a wandering question. Over the course of an afternoon-and subsequent conversations-he mounts a furious defense of his businesses and decisions. "National Amusements is in great shape," Redstone declares. He says his company's theater chain-which, unlike most competitors, owns rather than leases the majority of its real estate-is worth far more than the widely estimated $500 million to $700 million, despite depressed real-estate values.

When it comes to Viacom and CBS, he insists there's "nothing wrong" with the companies-or at least nothing wrong with them that a resurgent economy can't fix. "When the market crashed, we crashed with it," he says, "so I have confidence that when the market and the economy turn around, you'll see Viacom back at $45-and higher!" When his big selloff of Viacom and CBS stock-worth an eye-popping $233 million-was first announced, Redstone vowed repeatedly in the press that he had "no intention" of selling a single additional share of Viacom or CBS. But "no intention" was a phrase that Wall Street interpreted as leaving more than a little wiggle room. To me, he puts it this way: "I'd like to say, 'I won't!' But these are public companies, and I have to be careful." And then, unable to stop himself, he makes a grandiose promise that it's by no means clear he can keep. "We won't sell CBS or Viacom! We don't have to!"

Redstone's visions of immortality for his vast business domain seem parallel to those he harbors for himself. And it's true that he has survived a series of personal crises that might easily have killed him. He nearly perished in Boston's terrible Copley Plaza Hotel fire in 1979, hanging from a third-floor windowsill as the inferno blistered 45 percent of his body. After enduring months of excruciating skin grafts, he went on to turn a chain of theaters started by his father, Mickey (who changed the family name from Rothstein), into a worldwide colossus comprising such enterprises as MTV Networks, Nickelodeon, Comedy Central, BET, Showtime, Simon & Schuster, an outdoor-advertising company, and hundreds of radio and television stations, not to mention the CBS broadcasting network and Paramount Pictures. Redstone accomplished this beginning in 1987 with National Amusements' highly leveraged hostile takeover of Viacom; a little more than a decade later, Viacom swallowed up CBS. (Redstone split Viacom and CBS into separate companies in 2006 in a vain attempt to "unleash value.")

Four years ago, Redstone was diagnosed with prostate cancer. He now claims to have "made medical history" by becoming cancer-free, crediting a daily regime of 60 to 70 minutes of exercise-and all those antioxidants.

Along the way, Wall Street cheered Redstone's acquisitions. Some of them, with the benefit of hindsight, now look like losers, CBS chief among them. The broadcasting behemoth, despite boasting the TV network that won the latest ratings sweeps, is starving just like its brethren from falling advertising revenue in a souring economy; in the third quarter of 2008, it was forced to take a $14 billion write-down on the reduced value of its television and radio stations. As he sits in his living room, his P.R. man scribbling notes, Redstone takes a swipe at Moonves. He tells me that Moonves, a hard-charging, universally respected television programmer, "overpaid" for CNET, a group of internet sites that CBS acquired last summer for $1.8 billion. While that's a commonly held view on Wall Street, it's more than a little alarming to hear it endorsed by Redstone, who, as executive chairman of CBS's board, signed off on the CNET purchase price. He airily brushes off responsibility. "You have to understand the way I operate. I'm extremely nonintrusive," he says with no apparent irony. "I told Les that I and many investors did feel that the price he paid was too high," Redstone adds. "I made no bones about it."

Moonves declines to be drawn into a public spat with his boss. "You'll have to get that from him," he says. "I've talked to him a number of times about [CNET] and went through it." He adds, "There's not a major move I make without checking with him and making sure he's okay with it."

Redstone is still second-guessing another business decision-the failure of Viacom to purchase the social-�networking site MySpace, snapped up by Murdoch's News Corp. in 2005. Redstone blamed the popular Tom Freston, then chief operating officer of Viacom. Freston was credited with much of the company's success in building MTV into a hugely profitable global brand. Redstone, who had promoted Freston to Viacom C.E.O. even after the MySpace debacle, summarily fired him in September 2006. A new book about the deal, Stealing MySpace, by Julia Angwin, argues, however, that it was Freston who pushed Redstone to keep bidding against Murdoch and that Redstone and Dauman-who was then a Viacom board member and is now the company's C.E.O.-shut Freston down. Redstone, always ready to justify his positions and relitigate ancient conflicts, offers his version of events. "Nobody, certainly not I, stood in the way of Tom [Freston] making that deal," he says. "Actually, I pushed Tom to make the deal. I pushed him."

And then Redstone goes off on his rival in the deal. "The fact is that Murdoch will pay anything. Just look at the Wall Street Journal-he paid at least $5 billion, he had no competition," Redstone says. "Murdoch is known to make deals without due diligence." He adds, "I don't want to attack him, because I like him a lot....?I'm not criticizing him. He has his style; I have mine." A Murdoch spokesman declined to comment.

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As Redstone spins revisionist history, Paula sits barefoot and curled up on a sofa, listening and occasionally chiming in protectively, especially when I ask Redstone if it's prudent corporate governance for an octogenarian to be in charge of two public companies. "That's unfair," Paula tells me. "That's ageism."

It's a little unclear what she's doing there at all, considering the fact that Redstone is about to dispatch her from the fabulous life into which she was only recently welcomed. He has already bought two houses for her-a beachfront condo in Sarasota, Florida, and a house in Beverly Hills-both at a considerably lower altitude, in every respect, than the one in which she currently resides. Redstone declines to reveal what he paid, but he makes it clear that the houses will be in her name alone and that he is giving her substantially more than is required by their prenuptial agreement. (He won't say how much more, but a source close to the family says the total is nearly twice the $5 million figure.) "He's a pussycat," Paula gushes and then goes on to reminisce about their first date, which was set up by a mutual friend. She claims she didn't even know what her suitor did for a living. "He could read books," she says, with a vague smile. "He was charming. He held my hand. He would give me a sweet and gentle kiss."

"When we go out, people don't think I'm her father," Redstone volunteers with pride. "They know I'm her date." So why the divorce? Redstone's explanation seems less than forthcoming-that he is traveling so frequently on business, all over the world, that it's really "not a life for a wife to have." Paula offers, "We're two type-A personalities."

She listens, poker-faced, as Redstone tells me, "I would hope she will meet someone nice, who treats her well and isn't after her money-because she'll have a lot of money. And I hope she has a baby. She could still have a baby at her age." In an aside so implausible that it requires suspension of disbelief, Redstone adds, "She is the first lady not just of Viacom, but of Hollywood, and she will continue to be." At one point, Paula excuses herself to retrieve their four dachshunds, and as she leaves the room, she pinches Redstone's left earlobe in a showy display of affection.

In a later conversation on the phone, Redstone says, "I've told her she can buy any kind of furniture she likes [for the Beverly Hills house]; there's no limit at all on what she spends. As soon as it's sufficiently furnished for her to move in, then she'll move in. In the meanwhile, she stays in this house, and she's welcome. I want Paula to be happy, to be well-off financially for the rest of her life." As for dating other women, Redstone claims, "After I'm divorced, maybe. Maybe I will go out with women, but while I'm still married, the only woman I will take out is Paula."

Their friends talk about their sexual chemistry-and Sumner's libido. "I had a feeling they were always playfully arguing with each other, saying 'Go fuck yourself' and holding hands," says one frequent dinner companion. "Both of them love to talk about sex. Normally, if you make a dinner appointment with Sumner, he shows up on time, but if they show up 15 minutes, half an hour late, they might say, 'We had sex four times today!'?"

But recently, the marriage had become increasingly tempestuous. The Redstones' profanity-laced arguments were the talk of the entertainment industry. Sylvester Stallone, their next-door neighbor in Beverly Park, figures in a widely repeated anecdote that Redstone denies. According to two Hollywood insiders who spoke with Stallone and his wife, Jennifer Flavin, Redstone erupted a year ago at one of Arnold and Anne Kopelson's regular Sunday-night movie screenings, when Redstone was anxious to leave and Paula tarried to schmooze with Stallone. "Why don't you just fuck him already, so we can go home?" Redstone allegedly shouted. Stallone-who friends say was outraged by Redstone's remark-declines to comment.

Robert Evans, the legendary Hollywood producer who has been friends with the mogul ever since Redstone was an unknown movie exhibitor from Boston trying to strike deals for first-run features, suggests Redstone won't lack for companionship. "He loves women," Evans says. "I don't mean he loves women as a dirty old man. He loves the company of women. And he can be very charming. He plays the piano beautifully, even though his fingers are somewhat distorted from the fire, and he sings." The 78-year-old Evans, whose seven wives have included Ali MacGraw and Catherine Oxenberg, is no slouch himself. "Next to him, I think I am," he says. "No kidding." As to why women are attracted to Redstone, Evans says, "It's power. Power is a great aphrodisiac. I gave that line to Henry Kissinger." In the middle of our phone interview, Evans' secretary interrupts to inform him that Redstone is on the other line and demanding to speak to him right away. "Will you please tell him I'm on the phone?" Evans asks. "I'm afraid," I overhear the secretary protesting.

Arnold Kopelson probably has the most convincing take on why Redstone's second marriage didn't last. "I just think it's a period where Sumner is now moving on to something else. He spent five very good years with Paula, and I must assume that, for whatever reason, he decided he wanted to move on. Maybe it's like another business deal."

Redstone's apparent inability to separate business from personal dealings is at the heart of the conflict with his family and has major implications for the future of his companies. For years, he hasn't been on speaking terms with his 58-year-old son, Brent-a former Boston prosecutor who claimed in a 2006 lawsuit (since settled for $240 million) that his father had been denying him his rightful inheritance. Before the falling out, Brent had held a variety of jobs at Viacom and National Amusements, and today he lives on a ranch in Evergreen, Colorado. "I was shocked, and it hurt me," Redstone says about Brent's lawsuit. "The lawyers convinced him to do this." As he talks about his son, he struggles to maintain his composure. "I hope he's happy doing nothing, living on his farm. I want him to be happy. I told his wife, Annie, that I don't think it's right that he's not doing anything. [Before the lawsuit] I'd offered him various roles in the companies." Brent, through his lawyer, declined to comment. Sumner's nephew Michael is also litigating over similar issues. Suing over money seems to be a Redstone family tradition-back in 1972, Michael's father, Eddie Redstone, sued both Sumner and their father, Mickey, though Sumner says he and Eddie have buried the hatchet.

But the relationship that remains the most volatile, and upon which untold millions of dollars and the fate of an empire rest, is the one between father and daughter. After Sumner's death, Shari might find herself in a less exalted position than the one she really wants. Her post-Sumner role at Viacom and CBS hinges on a private trust that he established in 2003 to safeguard his 80 percent stake in National Amusements (to Shari's 20 percent) and set the terms of succession. Shari's supporters say the trust guarantees her the chairmanship of both public companies; Sumner insists it's up to the Viacom and CBS boards. Either way, a power struggle seems inevitable.

In the end, she might wind up with the titles but not the power. That's because she's just one of four trustees, with just one vote. The other three are Viacom's Dauman (but pointedly not CBS's Moonves) and longtime Sumner confidants George Abrams and David Andelman. So one possible scenario is that Dauman, Abrams, and Andelman could band together and decide the outcome of all significant issues, whether Shari agrees or not.

These days, as with virtually everyone else in his life, what Redstone has to say about his daughter is complicated and often contradictory. When he and I meet in L.A., he initially praises her stewardship of National Amusements' theater chain. "Shari is No. 1 in the exhibition business," he says. "I consider her to be the best. I've never criticized her for her running of the circuits." But he can't resist needling: "We don't always see eye-to-eye. She feels strongly about the exhibition industry, but I don't think it's a growth industry." He also shifts some blame to her for the catastrophic investments that National Amusements made in Midway Games, the videogame company he recently sold for a pittance. "They were all approved by the board, including Shari," he says. "I'm not passing the buck. But Shari was on the board-I was not. Midway has been very painful." He says Shari waited too long to change "incompetent" management at the company, of which she was chairwoman before she resigned in November to concentrate on National Amusements' debt problems.

National Amusements insiders say Shari actually opposed the continuing investments in Midway, and it was Redstone, through his control over the parent company, who pushed them. Shari declined to comment for this story.

Like her father and brother, Shari was trained as a lawyer. She received her degree from Boston University School of Law; after getting married, in 1980, she opted to stay at home to raise her three children. Redstone had installed Shari's then-husband, Ira Korff, a businessman and an Orthodox rabbi with advanced degrees in law and international relations, to oversee the National Amusements chain, which Korff did through the early '90s, a period during which it thrived. According to family lore, when Shari told her father that she and Korff had decided to split after a decade of marriage, his only response was, "Does that mean Ira's going to leave the company?"
At National Amusements, and then at Viacom and CBS, Shari developed something of a reputation for not always mastering the details. Moonves and Dauman are said by insiders to tolerate her presence in their boardrooms, but they keep her at arm's length and do not seek out her advice. Moonves has told at least one executive, whom Shari had asked to meet with privately, to steer clear.

Indeed, employees of the companies say Shari shares some of her father's expansionary impulses and that Sumner has indulged her, at least on some occasions. Her detractors say she may have contributed to the theater chain's-and therefore to National Amusements'-woes by continuing to plow huge sums into building multiplexes and luxury venues with stadium seating even as the economy soured. But her supporters claim it was Sumner, not Shari, who ran up debt by spending hundreds of millions of dollars on retrofitting older theaters with deluxe accessories. Shari was so incensed by the spending, according to her partisans, that one day, in the mid-1990s, she confronted her father at Viacom's headquarters in New York, delivering an ultimatum that he either stop interfering or she would leave the company. Sumner backed off.

At one point during our conversation at his home, Redstone suddenly waxes sentimental about their filial bond, saying, "We have a very loving relationship-she has been the love of my life. When she was a baby, I was the only one she would let feed her."

Then he hands me a document to demonstrate their continued closeness. Dated last May, it's a fax from Shari's office at National Amusements headquarters in Dedham, Massachusetts, responding to her father's request for a one-on-one meeting in Los Angeles. The note, typed completely in capital letters, is fraught with subtext: i've been giving it a lot of thought and for a variety of reasons i don't think that it makes sense for us to get together next week, it begins. i apologize for any inconvenience to you but i have another idea, she goes on, suggesting that they meet the following week in New York, ...perhaps with the kids (or even my mother) as i would like to keep this strictly social and feel it may be easier to do that here in ny with family. It closes with the word love, but a secretary had signed Shari's name.

These days, Redstone and his daughter communicate almost exclusively in writing or through spokespeople trading statements in the media. As for the succession question, Redstone continues to dodge the issue-or, if he comments at all, he makes it clear he's not planning to anoint her. In an open letter to Forbes magazine in July 2007, he stated that "the boards of the two public companies, Viacom and CBS, should select my successor." Then, last summer, he revealed that he was negotiating for her to buy the theater chain and separate herself entirely from his business interests. To me, he equivocates, but takes a none-too-subtle dig at her, suggesting that she's pushing too hard.

"Two years ago," he says, "I told her that 'If you give up your idea of the right to succeed me automatically, you would gain credibility with the boards.'?" Then he pauses. "But I think she's taking the advice of lawyers more than of her father."

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