CBS Corporation is suing parent company National Amusements, Inc. (NAI) in an attempt to dilute the controlling voting power of Shari Redstone, who is trying to force CBS to re-merge with Viacom. Les Moonves & Co. aren’t feeling the partnership.
Through NAI, Redstone effectively controls both publicly traded companies. She currently has about 79 percent voting power over the two media giants; CBS is considering actions that would drop that down to 17 percent through a special dividend.
Such a move could basically block Sumner Redstone’s daughter’s intentions, though it would not “dilute the economic interests of any CBS stockholder,” the network told reporters on Monday
As part of the company’s move to block Shari Redstone, CBS filed for a temporary restraining order, which a Delaware court will hear on Wednesday, a day before CBS’s board is scheduled to meet to decide whether to follow through on its proposed plan.
“Through her control of NAI, Ms. Redstone’s recent actions have led the special committee to conclude that she presents a significant threat of irreparable and irreversible harm,” CBS’ morning legal filing read.
“Ms. Redstone has acted to undermine the management team, including, without board authority, talking to potential CEO replacements, deriding the Chief Operating Officer and threatening to change the Board. These escalating attacks make it difficult for management to perform its duties and threatens continuity of management,” the suit read. It also blames Redstone’s actions pertaining to the potential merger for the drop in the network’s market cap in recent months.
CBS has called a special meeting of its board for Thursday to discuss the possible dilution plan and other options “to protect the company against Ms. Redstone moving forward,” attorneys wrote. The broadcaster wants a court to stop Redstone and NAI from taking part in or stopping that meeting.
National Amusements said in a statement sent to TheWrap that it is outraged by CBS’s actions. The company said Redstone had no intention of replacing the CBS board or forcing a deal that was not supported by both companies.
“National Amusements is outraged by the action taken by CBS and strongly refutes its characterization of recent events. CBS itself expressed support for the strategic merits of a combination with Viacom, and it is our understanding that both Special Committees had reached a provisional agreement on economic terms,” the statement reads. ” NAI believes CBS’s action today was precipitated following NAI raising specific concerns about incidents of bullying and intimidation in relation to one CBS director, dating back to 2016. NAI has made every effort to deal with this matter privately and confidentially. Unfortunately, CBS’s action today continues to enable and empower such conduct.
“Ensuring the long-term success of CBS continues to be NAI’s sole interest. This precipitous lawsuit, and the efforts of CBS management and its “independent” directors to wrest voting control from NAI, are outrageous,” the company continued. “We intend to defend our position vigorously and look forward to presenting our arguments in court.”
Redstone’s father, Sumner Redstone, first brought CBS and Viacom together in 2000, only to split them again in 2006. Rumblings of a reunification have periodically surfaced ever since, most significantly in September 2016 when National Amusements, the parent company of both media corporations, asked the boards of each to explore the possibility — talks which eventually fell by the wayside.
Viacom declined to comment.
Trey Williams contributed to this reporting