Tuesday, May 15, 2018 1:00 am
CBS sues to head off Redstone's family
Jef Feeley and Lucas Shaw | Bloomberg
A long-simmering dispute between CBS and the daughter of billionaire Sumner Redstone erupted into open warfare, throwing a potential deal with Viacom into doubt.
The broadcaster sued controlling shareholder National Amusements Inc. on Monday, the first step in an attempt to wrest control of the media company from the Redstone family. CBS wants to head off a threat by heiress Shari Redstone to oust some of the network's directors and block a shareholder vote on a proposal to lessen the Redstones' control of the broadcaster.
Hanging in the balance is a potential merger between CBS and Viacom, two companies controlled by the Redstones. After a year and a half of resisting National Amusements's entreaties to pair up the businesses, CBS decided to challenge its controlling shareholder – a move that could give its leadership greater power to merge with other companies.
“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,” CBS officials said in the suit, filed in Delaware Chancery Court.
“National Amusements is outraged by the action taken by CBS and strongly refutes its characterization of recent events,” Sara Evans, an outside spokeswoman for the Dedham, Massachusetts-based theater owner, said in an emailed statement. “NAI had absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies.”
Viacom declined to comment.
Judge Andre Bouchard has set a hearing for Wednesday on CBS's request for a restraining order that would prevent Shari Redstone from blocking a Thursday special shareholder meeting to consider a dividend that would dilute the voting shares of Redstone's company to 17 percent from 79 percent.
The two companies have been locked in an unusual tussle. The Redstone family controls both businesses, and they were one corporation before a breakup more than a decade ago. But getting them back together has proved challenging. Shari Redstone has indicated before that she wants Viacom CEO Bob Bakish to become the combined company's second-in-command. CBS Chief Executive Officer Leslie Moonves would prefer his own people in charge.
The network suit is an effort to stop Shari Redstone from copying her father's 2016 gambit to reassert control over the Viacom board once questions arose about whether the billionaire's mental capabilities were waning.
The Redstone family booted Viacom CEO Philippe Dauman off the board along with four other directors so the controlling shareholder could change Viacom's management, which the Redstones blamed for the company's declining stock price at the time. Dauman later resigned as Viacom's CEO.
Shari Redstone sits on the boards of CBS and Viacom, and is the president of National Amusements, the movie theater chain through which her family controls those two media companies.
The 94-year-old Redstone's mental health was at the center of a more than year-long fight over Viacom.