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CBS sues Shari Redstone as it moves to lessen her control

15 May 2018
CBS sues Shari Redstone as it moves to lessen her control

National Amusements' Shari Redstone was reportedly pushing for Viacom CEO Bob Bakish to be installed a chief operating officer of the combined company, while CBS CEO Les Moonves reportedly wanted to keep his current COO, Joe Ianniello.

CBS claims National Amusements is seeking to prevent it from interfering with a special meeting of the CBS Board of Directors - where it wants to issue a special dividend of common stock, which would dilute National Amusements' voting interest to 17% from 79%.

As part of an effort to loosen control by its parent and controlling company - effectively stopping it from merging with Viacom - CBS has filed a lawsuit against National Amusements alleging "breaches of fiduciary duty".

"The special committee [of the CBS board] has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders' interests and would unlock significant stockholder value", CBS said in a news release.

The holding company "had absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies", the statement sent to AFP said. With Monday's Closing Bell on Wall Street, CBS shares were up $1.14 to $53.66 - their highest close since April 4. She's now sparring with Moonves over a plan to reunite CBS and Viacom, less than two years after giving the boot to Viacom's previous CEO.

But CBS, led by its chairman Leslie Moonves, has made a decision to put up a fight with a high-stakes gambit that could forever change authority at CBS by shifting power from the Redstones to public shareholders.

CBS is "at least sending the signal and creating evidence they had the best interests of everyone in mind, and not (Shari Redstone)", said Brian Quinn, a professor at the Boston College Law School. It wouldn't dilute economic interests of any shareholder.

United States media giant CBS filed suit on Monday, alleging that majority shareholder Shari Redstone is seeking to "force" a merger with rival Viacom on unfavorable terms. While there may be an obvious cultural misalignment between Verizon and CBS, a tie-up between the No. 1 USA wireless carrier and the TV-network owner would be a natural response to the $109 billion pending merger between their rivals, AT&T Inc. and Time Warner Inc.

The talks, however preliminary, provide a backdrop for the CBS-Viacom merger discussions. "With the expectation that the Redstones may attempt to interfere with the planned meeting, CBS in a preemptive measure is demanding a temporary restraining order from a DE judge".