New York — Contributing editor Lloyd Grove sits down with Sumner Redstone, the legendary 85-year-old chairman of Viacom, for an exclusive interview about his family, his many rivals, and his slowly unraveling empire (“Sumner’s Discontent,” p.68). His company’s stock is diving, his debt is mounting, and Redstone may now be forced to sell off some of his holdings, Grove reports. “In early December, Redstone parted with a chunk of his realm at an embarrassingly low price, selling National Amusements’ controlling stake in the money-losing videogame publisher Midway Games—into which he had poured an estimated $800 million over the past decade—for a mere $100,000 to a private investor,” Grove writes. “Most humiliating of all is a recent news report’s suggestion that Redstone might not even be a billionaire any longer.” Yet Redstone refuses to acknowledge anything approaching failure, insisting there’s “nothing wrong” with Viacom or CBS—or at least nothing that a resurgent economy won’t fix. Redstone also refuses to acknowledge that his time on this earth may be running out. “I intend to live forever!” he professes. “I won’t [die]. I’m telling you I won’t!” But Redstone is indeed 85 and facing a financial meltdown, his position measurably worse than his competitors’, Grove reports. And few of his peers or former colleagues have anything favorable to say about him. A prominent talent agent trashes Redstone as “the most disliked man in Hollywood,” while a former top Viacom executive calls him a “scumbag,” and another claims he’s “the most egocentric human being you could ever run across.” This former Viacom executive adds, “There’s a group of people he says are his friends who would happily cut his heart out with a rusty knife.” Redstone is not reticent about some of his rivals either, saying of Rupert Murdoch, “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. Murdoch is known to make deals without due diligence.” Redstone’s relationships with family members have also been tumultuous—especially with his daughter Shari. “I think she’s taking the advice of lawyers more than of her father,” Redstone says. He even takes swipes at his own executives, telling Grove that CBS chief Les Moonves “overpaid” for CNET, though Moonves responds, “There’s not a major move I make without checking with him and making sure he’s okay with it.” Reports of Redstone’s public spats with his soon-to-be ex-wife Paula are also shocking. According to two Hollywood insiders, Redstone, while attending a Sunday night screening at a friend’s home, grew angry with his wife, who tarried and schmoozed with Sylvester Stallone when Redstone wanted to leave, prompting him to yell, “Why don’t you just fuck him already, so we can go home?”


Also in the February issue:

“The Man Who Made Too Much” (p. 78)  Hedge fund manager John Paulson has profited more than anyone else from the financial meltdown. His $3.7 billion payday in 2007 broke every record, and he made it all by betting against homeowners, shareholders, and the rest of us. Now contributing editor Gary Weiss asks, Is Paulson brilliant or evil? “John Paulson is smart enough to know that at this particular moment in history, the less he’s heard from, the better,” Weiss writes. “The simple reason: He is not suffering. In an era in which losers are universal and profits seem somehow shady, Paulson is the most extravagant of Wall Street’s winners.” Weiss reports that Paulson’s funds at Paulson & Co. (which has $36 billion under management and is getting bigger by the day) were up $15 billion as the markets began to teeter in 2007, garnering him a personal profit of $3.7 billion. As the economy has worsened, many accusations have been levied at short-sellers like Paulson for causing turmoil in the markets, especially by ousted finance titans like former Lehman Brothers C.E.O. Dick Fuld and former Bear Stearns head Alan Schwartz. But some “hedgies” are sick of the “blame-the-shorts” litany. Weiss reports that on the day before the Fed’s rescue of Bear Stearns, Schwartz called hedge fund manager James Chanos to request that he appear on CNBC the next morning to “tell everyone you’re still a client, you have money on deposit, and everything’s fine.” “So here it is,” Chanos says. “Alan Schwartz takes the position ‘Short-sellers were our problem,’ and who did he try to get to vouch for him on the morning of the collapse? The largest short-seller in the world. You want to talk about ethics and who’s telling the truth on these things? It’s unbelievable. But the more important thing is that the run on the bank at Bear Stearns preceded the rumors.” Setting aside who’s to blame for the current crisis, Paulson says presciently, “We have a long way to go before we reach the bottom.”

“Full Disclosure: Katie Couric” (p. 88) CBS Evening News anchor Katie Couric sits down for a candid interview with contributing editor Sheelah Kolhatkar to discuss feminism, Sarah Palin, and the future of TV news. On network news, Couric admits, “Clearly I knew this was a declining genre when I came here, because I’m not an idiot, you know? I know that network news was declining, and evening newscasts in particular.” On why she thought so many people had a negative reaction to Hillary Clinton, Couric replies, “She’s ambitious. And I think there are still qualities that, when women exhibit them, are less acceptable than when men naturally exhibit them—i.e. ambition.” In discussing her having been chosen as a network evening news anchor, she says, “I’m a very spontaneous person, and I do have a lot of personality. Does that sound conceited?” When asked which newspapers she reads, she jokes, in an allusion to her Sarah Palin interview, “Anything and everything.”

“The Long Shot” (p. 92) Tiger Woods may be great at golf, but Paul Sullivan investigates whether his name is enough to carry a golf course and real estate business through a spiraling economic crisis. Woods is launching not one but three exclusive golf communities (the Tiger Woods Dubai in the U.A.E.; High Carolina near Asheville, North Carolina; and Punta Brava in Ensenada, Mexico) in the middle of the worst economic situation that the world has seen in decades. “He is attempting this with no experience in course design but with blue-chip financial backers who are no doubt hoping that his reputation for being clutch in golf tournaments will translate,” Sullivan writes. At a time when foreclosures are rising across the country, Sullivan reports that the entry-level price for one of the Punta Brava community’s 90 homes is $3.5 million, while the most expensive is $12 million. Fractional ownership of one of the 60 villas along with membership fees costs $1.6 million. Legendary golfer Jack Nicklaus, also a course designer, tells Sullivan that Tiger’s “on his third golf course contract,” emphasizing the last word. “He hasn’t done any yet. I don’t think he’s finished any golf courses.” Woods, however, remains confident, saying, “I don’t do anything quickly. I think through it…. It’s thinking through the process and looking at all the different options.”

“Barney Frank Has Got Your Number” (p. 100) Contributing editor Andrew Rice profiles the powerful and unpredictable House Financial Services Chairman Barney Frank, who is making Wall Street quake at the thought of his calling the shots for the financial industry. Rice reports that the openly gay Massachusetts congressman has always believed that the government should muscularly regulate the financial system and that the derivatives markets and the activities of hedge funds should be brought into the open and governed by rules. And now more than ever, Frank is undeterred by the fact that hedge funds have traditionally resisted the slightest government oversight. “No one will listen to them,” Frank declares of the hedge funds he intends to regulate. “They have no power to resist.”

“Green Crude” (p. 50) Never mind falling oil prices. Bill Gates and the Rockefellers think they know a better way to fill up your gas tank: algae. Contributing editor David Ewing Duncan investigates whether this new green biofuel can actually become a reliable alternative source of fuel and the answer to our dependence on gasoline. As gas prices soared during the summer of 2008, investors pledged more than $1 billion to algae-fuel companies over a six-month period. Algae oil is relatively easy to produce and can be processed using existing refinery infrastructure, Duncan explains. The science is in place, but making algae oil more cost-effective remains a challenge. “Just how high crude-oil prices must go before algae becomes a viable alternative remains the big—and still unanswerable—question facing the industry,” Duncan writes.

“How to Value It: The Obama Economy” (p. 56) Contributing editor Alexandra Wolfe calculates a rough estimate of just how much the rush to sell—and buy—all things Obama may be injecting into the troubled economy. Based on sales of Obama-themed food products and merchandise and the increase in tourism to Kenya, Indonesia, and Chicago, Wolfe puts the total Obama stimulus at more than $3.5 billion.

“Oscarnomics” (p. 64) In Condé Nast Portfolio’s second annual “Oscarnomics,” Sophia Banay names the best and worst financial performances among this year’s movies. In a fiscal year dominated by The Dark Knight, the overall outlook for Hollywood was troubling. A few award highlights:

Worst Bet by an Investment Group: Morgan Stanley’s $150 million investment in Paramount’s Vantage.
Best Bargain Buy: Overture films paid around $1 million for domestic distribution rights to The Visitor.
Most Bang for the Budget: The Dark Knight
Best Performance by a Studio: Warner Bros.
Worst Overall Box Office: Proud American

“The Usual Suspects” (p. 84) Blankfein. Steel. Thain. Paulson. Kashkari. See a pattern? Matt Malone delves into Goldman Sachs’ “conspiracy” to take over the U.S. financial system.

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