Published: Tue, May 15, 2018
Economy | By Shawn Conner

CBS Sues National Amusements For Voting Control, Stops Viacom Merger

CBS Sues National Amusements For Voting Control, Stops Viacom Merger

National Amusements called the lawsuit "outrageous" and said that it disputes CBS' "characterization of recent events.We intend to defend our position vigorously and look forward to presenting our arguments in court".

Shari Redstone, who wants the merger between the two companies, is accused of "breaching her fiduciary duty to CBS shareholders in her pursuit of a CBS-Viacom merger". It also accuses Ms. Redstone of interfering with the nominating and governance committee process.

What does this mean for the Redstone-controlled National Amusements?

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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. "These escalating attacks make it hard for management to perform its duties and threatens continuity of management", the filing states.

"This behavior and the uncertainty and negative public attention it has engendered have harmed CBS and its stockholders and will continue to do so", the suit states.

In its lawsuit, CBS said that its stock has fallen from almost $70 to around $50 in the last several months-an approximately $7 billion loss in market cap born by Class B stockholders. "This loss of market value has occurred despite management consistently delivering excellent results".

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If the dividend is approved, National Amusements' voting rights in CBS would shrink to about 17 percent from about 80 percent, more in line with National Amusements' economic stake in CBS of 10.3 percent, according to CBS's lawsuit, filed with the Court of Chancery in Delaware.

Media analyst Barton Crockett spotted CBS's disclosure of an outside party's interest in its lawsuit seeking a temporary restraining offer to prevent Redstone from taking steps to replace directors or interfere with a board vote on a proposal that would reduce the family's voting control over the network. "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".

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