CBS is going hostile against parent company National Amusements Inc. (NAI) by suing the company and its owners, Sumner Redstone and his daughter Shari Redstone. The network claims the Redstones breached their fiduciary duty to all shareholders.
The suit was filed by CBS and the Special Committee of its Board of Directors (led by chairman Leslie Moonves), which is considering a maneuver that would give individual CBS shareholders more say over the company. They’ve planned a board meeting for Thursday.
As it stands, National Amusements has a 79 percent voting stake in CBS. The change would dilute National Amusement’s interest to 17 percent. National Amusements is 80 percent owned by Sumner Redstone and 20 percent owned by Shari Redstone, the latter of whom has been pushing for CBS and Viacom to re-merge. National Amusements also has a 70 percent ownership stake in Viacom.
“Ms. Redstone has acted to undermine CBS’s highly lauded and successful management team in a series of escalating attacks, including by talking to potential CEO replacements without Board approval and deriding executives,” the suit claims.
It continues: “Ms. Redstone unilaterally, and without Board approval, informed a potential acquirer of CBS to not make an offer for the Company, depriving the Board of the opportunity to consider a potentially value-enhancing transaction.”
“National Amusements is outraged by the action taken by CBS and strongly refutes its characterization of recent events,” the company said in response. “NAI had absolutely no intention of replacing the CBS board or forcing a deal that was not supported by both companies. NAI’s conduct throughout supports this, and reflects its commitment to a well-governed process.”
CBS and Viacom had been part of the same company until 2006. In 2016, National Amusements called for a re-merger only to put the plan on hold. In February of this year, National Amusements again called on both companies to consider a re-marriage.
Moonves, who is also CEO of CBS Corp., has been cool to the idea. “There can be no assurance that this process will result in a transaction or on what terms any transaction may occur,” CBS said in a statement at the time.
The suit seeks a temporary restraining order preventing National Amusements and the Redstones from interfering with the CBS board “or modifying the Company’s governance documents.”
In its statement NAI continued, “This precipitous lawsuit, and the efforts of CBS management and its ‘independent’ directors to wrest voting control from NAI, are outrageous. We intend to defend our position vigorously and look forward to presenting our arguments in court.”