(FORTUNE Magazine) – Why is it, exactly, that people have always underestimated Sumner Redstone? Could it be that he spent most of his life away from the media glare, running a not-very-glamorous chain of movie theaters in Boston? Could it be that his company, Viacom, began as a hodgepodge of cable systems and TV reruns, without the pizzazz of Disney or Time Warner? Or could it be that Redstone himself can't match the charisma of a Ted Turner, the creative spark of a Michael Eisner, the buccaneering spirit of a Rupert Murdoch, or the analytical candlepower of a Gerald Levin? In an industry that worships youth, the fact that Redstone, at 75, is the senior citizen of the crowd surely hasn't helped his cause. Nor has his bluster, his habit of wearing cheap suits, or his occasional malapropisms. His brain thinks Oprah Winfrey. His mouth says Winifred Oprey.

Never mind. Those who underestimated Redstone missed the mark, and not by just a little. After an impressive 18-month run-up in Viacom's stock--the capstone of a lifetime of savvy investing, shrewd dealmaking, and old-fashioned hard work--Redstone has made more money from the entertainment business than anyone else alive. He has about $9 billion worth of Viacom shares, plus another $1 billion or so in National Amusements, his privately held theater chain. Redstone's longtime shareholders have fared very well too; better, in fact, than those who favored his rivals. An investor who put $100 into Viacom after Redstone bought it in 1987 would now have $926, while the same amount would have grown to $771 at Levin's Time Warner, $770 at Eisner's Disney, and $543 at Murdoch's News Corp. By that reckoning, Redstone is king of the moguls.

The numbers only hint at Redstone's remarkable life story, though. All the other media CEOs enjoyed privileged upbringings; he grew up during the Depression, in a tenement where the bathroom was down the hall. He made himself into an academic superstar at some of the nation's finest schools. He became a war hero of sorts, helping crack Japanese codes during World War II. There was the now-famous Boston hotel fire that nearly killed him but instead only galvanized his ambition. He was 63--an age when most executives shop for a retirement home--when he bought Viacom.

To those who don't know him, the latest chapter in Redstone's story may be the most surprising. Less than two years ago Viacom, especially its Blockbuster Video unit, was in trouble. Redstone's reputation sank along with the company's stock. "Everybody treated me as if I was stupid," he says. "Nothing I'd done before mattered. It hurt me a lot." Another 73-year-old might have walked away. Redstone couldn't. He hurled himself at the problems, camping out in Blockbuster's Dallas headquarters until he had remade its business model, fixed its distribution and marketing woes, and found a new CEO for the unit. "Whenever you have a catastrophic situation, you'd better be on top of it," Redstone says.

This may point to a final reason that the Viacom chairman and CEO has not received the full credit he's due. His success didn't spring from a brilliant vision, a creative breakthrough, or a bold bet on technology as much as it did from his sheer tenacity. This is a man who works all the time and operates in only one mode: relentless. "It's his job, his life, his hobby--everything is the company," says Philippe Dauman, one of Viacom's two deputy chairmen. Redstone gets up by dawn most mornings to check the movie grosses. (On Saturdays he checks them at 3 A.M. Don't ask.) On a recent Sunday, after a five-day West Coast business trip, he climbed back on the company plane with his daughter and business partner, Shari--this time to scope out real estate in upstate New York for movie theaters. "If he had the time," Shari sighs, "he would be involved in every single aspect of everything that goes on everywhere." There's no line between work and play, weekday and weekend, the company and the man. "Viacom is me," Redstone says. "I'm Viacom. That marriage is eternal, forever."

Certainly Redstone has seen to it that he'll run the company for as long as he likes. He controls 67% of the voting stock and 28% of the shares outstanding at Viacom, which owns the Paramount movie and TV studios; the MTV, Nickelodeon, and VH-1 cable networks; Blockbuster; Showtime Networks; 19 TV stations; half the UPN network; Simon & Shuster consumer publishing; Paramount theme parks; and 80% of Spelling Entertainment. This ebullient grandfather runs a company that lives off the young--kids who watch Nickelodeon, teenagers glued to MTV, fans of Beverly Hills 90210, and the under-40 crowd that dominates moviegoing and video rentals.

Just about all those businesses are thriving. By far the most powerful engines driving Viacom are its high-margin cable networks, which have enjoyed double-digit earnings gains as they have expanded globally during the 1990s. Paramount has become the best-run major studio in Hollywood, releasing a string of winners while minimizing financial risk in a tough business. And Blockbuster has been revitalized; a minority stake in the 6,400-store video chain is being readied for an initial public offering this spring, and the rest is expected to be sold by the end of 1999.

By then Redstone will have remade Viacom, bringing a much needed focus and discipline to the unwieldy, debt-burdened giant created by its 1993 merger with Paramount. By selling a smorgasbord of assets, including Madison Square Garden, cable systems, radio stations, and a videogame company, Redstone has slashed debt from $11 billion to about $4 billion. His best deal was the sale of Simon & Shuster's educational, professional, and reference publishing businesses to Pearson for $4.6 billion; no analyst expected them to fetch that much.

Even after shedding assets, Viacom brought in revenues of $12.1 billion in 1998, up 13% over the prior year's, and operating income of $1.19 billion, up 31%, excluding a one-time charge for Blockbuster. After the Blockbuster sale, Viacom expects to consistently report net earnings for the first time since the mid-1980s. Gordon Crawford, senior vice president of Capital Research & Management and a longtime Viacom investor, says that with MTV and Nickelodeon leading the way, there's no reason the company can't grow 15% to 20% a year for the next decade. "There's a big, long-term, global opportunity there," he says. The stock has tripled since October 1997, reaching $90 before a split that took effect March 31.

For Redstone, that's sweet vindication. It's not about the money; while his net worth rises by $200 million with every dollar gain in the stock price, he has never sold a share and is mostly uninterested in the things money can buy. What drives him, more than anything, is winning. He looks at the stock price as a very public scorecard. "This is a guy who gets up every day and needs to win," says deputy chairman Tom Dooley. "He has to win a battle. He has to win an argument. He has to see the stock go up." This is why work doesn't wear him down. It charges him up, stimulates his brain, and even seems to retard the aging process. He isn't a classic workaholic or a drone--he's a happy warrior. "Sumner is the youngest man I know," says Sherry Lansing, chairman of the Paramount movie studio.

To be sure, Viacom still has its share of difficulties. Money-losing UPN, the struggling TV network jointly owned by Viacom and Chris-Craft, badly needs a fix. (Some investors want Redstone to take over the whole thing, as well as Chris-Craft's underperforming TV stations.) Viacom was slow to plunge into the Internet, although it has now embarked on a promising portal strategy built around MTV and Nickelodeon. (Insiders say another Internet deal's in the works.) To sell the Blockbuster IPO, Redstone will have to overcome skeptics who think the video-store business faces an inevitable long-term decline. (No way, he insists; the 1999 numbers look great.) And after the spinoff, Viacom will confront an entirely new question: what to do with its free cash flow, which could amount to as much as $1.5 billion by the year 2000. (Redstone says he's done the last of his big deals and that he'll probably buy up more of his own stock.) Finally, there's the succession question, a concern to investors. Retirement isn't in his vocabulary, but Redstone says, "When it's time for me to go, I'll go. And there'll be another great leader from inside Viacom in my place."

Note his words--"another great leader." Redstone is one of those self-made men whose confidence runs so deep that they seem immune to ordinary self-doubt. It's not a trait that leads to self-awareness, but it's probably good for business. "Optimism can be a driving force for a company," he says. "And what is optimism? It's confidence in your ability."

Redstone does have more reasons than most people to believe in himself. Take that 1979 hotel fire, which left him with severe burns over nearly half his body, including both legs. Doctors feared he'd die, then predicted he'd never walk, and later worried he'd lose an arm to an infection. But he is now hampered only by a right arm that hangs loosely from his shoulder and a gnarled hand with purplish skin.

There's a lesson there, he declares with his usual gusto: "Staying the course. Hanging in there. Refusing to drop. Having the confidence I could make it. Saying I'd walk when they said I couldn't. Today I'm running as fast as I could ever run on the tennis court."

Redstone has been running since childhood. His father, Max Rothstein, who changed the family name, rose from poverty to own nightclubs and drive-ins, and gave Sumner his first taste of show business. (He bought the Latin Quarter club from Barbara Walters' father, Lou.) But the real driver in the family was Sumner's mother, Belle. "My mother was very tough," he recalls. "When I used to practice piano, if I was going to practice for an hour, she would turn the clock back when I wasn't looking." He finished first in his class at the brutally competitive Boston Latin school, sped through Harvard in 2 1/2 years, and then joined his professor of Japanese, Edwin Reischauer, on an elite code-cracking team that deciphered Japanese communications during World War II. (To hear him tell it, they practically vanquished Hirohito on their own.) After Harvard Law School and several top-rung legal jobs in Washington, D.C., Redstone decided to go home to Boston to join his father in the theater business.

It was there that Redstone learned the mantra that would guide him at Viacom: Content is king. As an owner of lowly drive-ins, National Amusements was getting only second-run fare from Hollywood. Putting his legal skills to work, as he is wont to do, Redstone sued the studios and got access to their most popular pictures. He also became a big investor in Hollywood, once rushing out of a Star Wars screening to a pay telephone to buy 25,000 shares of Twentieth Century Fox. Later he bought stakes in Columbia, MGM/UA, and Loews, amassing the war chest he needed to launch his hostile, highly leveraged takeover bid for Viacom, then a little-known cable, broadcast, and syndication company.

Stepping onto a bigger stage for the first time, Redstone was greeted with catcalls. The old Viacom management dismissed him as "a two-bit theater operator from Boston," recalls Tom Dooley, a holdover from the old regime. Redstone has been trying to prove himself ever since. In the late 1980s, his lenders pressured him to reduce debt by selling MTV and Nickelodeon, which were then money losers. But content is king, remember, so he sold cable systems instead. During the epic takeover battle for Paramount, Redstone was cast as the underdog to the tough and brilliant Barry Diller. When Redstone persevered, taking on another huge load of debt, his detractors said that, swept up by emotion, he'd overpaid. Finally, when Redstone fired his popular CEO, Frank Biondi, and ran into problems at Blockbuster, he was derided as too old, too out of touch, and too domineering to run a modern media giant--"razzmatazz Redstone, the foolish boss of a bloated empire," as one financial columnist described him.

Nothing delights him more now than to prove his critics wrong. Aboard his Gulfstream III jet on the way to the Sundance Film Festival, Redstone runs the numbers on the Paramount deal. "We paid $10 billion. That was $2 billion more than we intended, thanks, as I like to say, to my $2 billion friend, Barry Diller." He quickly interjects that he's patched things up with Diller, explaining, "It's a mistake, if you want to run your company right, to let history get in the way of the future." In any case, he lists the Paramount assets that he has sold since the merger: the Simon & Shuster divisions, Madison Square Garden and its sports teams, and half the USA and Sci-Fi cable networks, which together brought in about $7.5 billion. Then he ticks off what he still has: Paramount's TV stations, Simon & Shuster's consumer publishing house, a Canadian movie theater chain, and a music-publishing company, which collectively are valued at no less than $4 billion by analysts. Total: $11.5 billion. And he's just getting warmed up: "I haven't mentioned the movie studio. I haven't mentioned the television studio. I haven't mentioned the library. And remember, we did a library deal with Kirsch for $2 billion." Now he can barely contain himself: "The deal from hell has become a helluva deal!"

Spend time with Redstone and he can wear you out. Take that trip to Sundance--please. Redstone flew out in the morning from New York, led a Viacom executive committee meeting over lunch at the Salt Lake City airport, rode up to Park City, stopped by a couple of cocktail parties, and held a brief meeting with Robert Redford, a co-owner with Viacom of cable's Sundance Channel. (Redstone and Redford are negotiating to buy out the channel's third owner, PolyGram.) Then Sumner watched a screening of a Showtime move about Ayn Rand, which he didn't like much, sat through a Q&A afterward with the cast, and finally went to dinner at a hotel. Now it's 11 P.M., no one's checked into his room, and Sumner's chiding an underling for ordering the wrong bottle of wine, talking up Viacom, telling stories about cracking the Japanese code, and slowly picking at his chicken casserole--while his deputies Dooley and Dauman look as if they want to shove it down his throat. They're like campaign aides who have to applaud every time the candidate delivers the same speech.

He exhausts them, and yet they're fond of him, the way you're fond of a mildly eccentric but caring uncle. The Viacom brain trust--Redstone, Dauman, and Dooley; MTV Networks CEO Tom Freston; and Jonathan Dolgen, who runs the Paramount movie and TV studios--operates informally, loudly debating issues and cracking jokes, with nary a Powerpoint presentation in sight. They "sometimes act like a dysfunctional family, but they are a family," an insider says. Redstone relies most closely on Dauman, 45, who represented him as a partner in a Wall Street law firm before joining Viacom, and Dooley, 42, an outgoing native of Brooklyn who rose up through finance. They're in and out of his office all day and on call the rest of the time. (Dauman remembers Redstone calling him during the Paramount takeover battle "every day--and I mean every day, Saturday and Sunday--at 5 A.M." Weary of it, he gently explained that the calls were disturbing his wife, and could Sumner wait until seven? Redstone apologized, saying he hadn't realized he was being disruptive. "The next morning," Dauman says, grinning, "the phone rings. Precisely at seven.") Los Angeles-based Dolgen and Freston, as operators of Viacom's biggest businesses, get more rope, although they, too, stay in touch. "Sumner has really entrusted us to run the business," says Freston, whose cable networks bring in nearly 40% of Viacom's cash flow.

What no one is permitted to do is put parochial interests ahead of Viacom's. For example, Redstone forced Paramount to make movies developed by MTV and Nickelodeon even though both sides resisted at first. "It was like a Pakistani marriage," Freston recalls. "We didn't know each other, but we'd heard of each other." Actually, it was worse--the studio people didn't want help with their business, and MTV's hipsters would have preferred to work outside Hollywood, with an independent studio like Miramax. Today, while some friction remains, the partnership has paid off: Paramount and MTV have made a string of profitable movies, while Nickelodeon's Rugrats movie, which cost about $25 million to make, has grossed just under $100 million. Redstone touted the arrangements to investors at private briefings during a recent Salomon Smith Barney investment conference. "The MTV and Nickelodeon people have taken their low-cost model from the cable networks and brought it to Hollywood," he says. When costs can't be held down, Paramount likes to spread the risk; by co-financing expensive pictures, the studio has never lost more than $25 million on a movie, according to Redstone.

But Redstone admits that making movies is Viacom's toughest business. Its best, by far, are the cable networks, with their strong brands, low costs, and margins of better than 30%. Nickelodeon dominates viewing among kids, despite the departure of guiding spirit Geraldine Laybourne and the arrival of new competitors; MTV has become the top-rated cable network among 12- to 24-year-olds; and VH-1, the newly energized music channel for baby-boomers, has greatly increased its ratings and ad sales. Growing, too, are the company's newer cable networks, such as TV Land, an oldies channel, and Comedy Central, home to the gross-out cartoon hit South Park, which will spin off a movie this summer. (Comedy Central is half-owned by Time Warner, owner of FORTUNE's parent.) Overseas, MTV and Nickelodeon are turning profitable after a decade of losses, during which they built distribution and established their brands. "Anybody who ignores the fact that 96% of the world's eyeballs are outside the U.S. is going to pay for it," Redstone says. "We're on the case." Today, MTV reaches about 282 million homes in 82 foreign territories, nearly four times as many as it reaches in the U.S.; the channel generated $250 million in revenue and $41 million in operating income last year, despite the economic turmoil in Asia.

Incidentally, Viacom's global strategy, which is aimed at generating big money five or ten years from now, is evidence that Redstone, at 75, remains a long-term thinker. For all his fretting over the stock price, he's been willing to sacrifice short-term results to build value over time, whether by investing $400 million in animation for Nickelodeon, or pouring more than $400 million, so far, into hapless UPN.

As for his own future, Redstone has designated Dauman to succeed him as Viacom's chairman in the event of his death. "He knows I will always look out for his interests," says Dauman, who is a close friend and the executor of Redstone's estate. Redstone says Viacom's next CEO will come from inside the company, and he has assured investors that neither his son, Brent, a Denver lawyer, nor his daughter, Shari, who runs National Amusements, will take over.

Will Redstone ever step aside? It's not likely, given his passion for the job. Last year he took his first vacation in years, a trip to the Caribbean island of Anguilla; the first thing he did upon arrival was get the hotel to install a new phone with a longer cord, "so that while I could enjoy looking at the water, I could be on the phone talking to the company." Even then, he says, "After three days I had a tough time." He is close to his grandchildren, who call him Grumpy, but otherwise he has few interests outside Viacom. He loves to eat well, and he enjoys tennis, but that's about it. Recently Redstone bought an apartment in New York's Pierre Hotel to replace his one-bedroom suite at the Carlyle, but back in Boston, he still lives in the suburban home he bought years ago for $43,000. "He has almost zero interest in money and the tangible things that money can buy," says Dauman. Remember those cheap suits? He used to send aides out to buy them, in batches, at Filene's.

Indeed, ask him what he wants out of life, beyond Viacom, and this $10 billion man describes an ideal morning in Los Angeles. "To me, staying in a bungalow at the Beverly Hills Hotel, walking out and being surrounded by flowers, and then going down the path to play tennis--that's the height of my material aspirations," Redstone says. "Then I get in the car to go to the studio."