CBS Loses Court Bid to Block Shari Redstone’s Maneuvers

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A judge has denied CBS’ request for a temporary restraining order against Shari Redstone’s National Amusements, Inc., which has made one of the two parties very happy.

“We are pleased by the court’s decision to deny CBS and its special committee’s unprecedented motion to try to deprive a shareholder of its fundamental voting rights,” NAI said in a statement on Thursday. “The court’s ruling today represents a vindication of National Amusements’ right to protect its interests. As we intend to demonstrate as the case proceeds, the actions of CBS and its special committee amount to a grievous breach of fiduciary duties and show no regard for the significant risk posed to CBS and its investors.”

During the hearing on Wednesday, Judge Andre Bouchard had issued a temporary protective order to give him time to fully consider the arguments heard and make a final ruling, and that’s what the two sides received today.

Also Read: Les Moonves Jokes About Messy Legal Drama at CBS Upfront: ‘How’s Your Week Been?’

The ruling comes ahead of the network’s scheduled board meeting set for Thursday evening, during which it plans to decide what course of action to take in an attempt to subvert Shari Redstone and National Amusement’s control over the company.

“Today’s ruling does not alter in any way the unyielding commitment of CBS and its Board of Directors to continue to act in and to protect the best interests of all CBS shareholders,” CBS said in a statement. “Notably, the ruling clearly recognizes that we may bring further legal action to challenge any actions by NAI that we consider to be unlawful, and we will bring such action if needed to protect the interests of all shareholders. We remain confident that we will prevail in the lawsuit previously filed by CBS and the members of its Special Committee.

“As previously announced, the CBS Board will hold a meeting at 5PM today to consider declaring a dividend of shares of Class A common stock to all of the Company’s Class A and Class B stockholders, as is permitted under CBS’ charter. This dividend would more closely align economic and voting interests of CBS stockholders without diluting the economic interests of any stockholder.”

Also Read: Shari Redstone Changes CBS Bylaws to Prevent Board From Diluting Her Control

CBS later said in an updated statement that despite the decision not to grant the temporary restraining order, the company plans to bring further legal action against National Amusements and Redstone for anything they consider unlawful.

CBS initially planned to issue a dividend to shareholders that would dilute Redstone’s 79 percent controlling interest in the company to 17 percent.

On Wednesday, Redstone and National Amusements moved to change the CBS bylaws in such a way that would prevent the board from subverting her control without her approval.

Also Read: CBS Sues Parent Company to Dilute Shari Redstone’s Voting Power, Stop Viacom Merger

According to Jill Fisch, a law professor at the University of Pennsylvania, shareholders have the right unilaterally to amend the bylaws under Delaware law. And unless the corporation has some sort of restriction in the charter or bylaws regarding timing or advance notice the changes take effect immediately.

The CBS board said that it was also open to other options to permanently resolve its Redstone problem, and it will likely address those during it board meeting.

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Would Shari Redstone Really Replace CBS Chief Les Moonves With Bob Bakish?

Read on: TheWrapTheWrap.

Shari Redstone is considering removing Les Moonves from atop CBS if he doesn’t agree to take on Viacom boss Bob Bakish as his No. 2 should the two companies become one again, according to Reuters. But would she really?

Not according to a spokeswoman for National Amusements, Inc., the umbrella company through which the Redstone family controls CBS and Viacom. “National Amusements has tremendous respect for Les Moonves and it has always been our intention that he run a combined company,” the rep told TheWrap.

A person with knowledge of the plans told TheWrap that the Reuters report of a threat to Moonves (which was echoed by CNBC) is “not reflective” of where the process stands. NAI is still waiting on a special committee to hash out such hiccups, and the person told us that they all still support that small group.

Also Read: Viacom Counters Initial CBS Offer With $14.7 Billion Valuation, Wants Bob Bakish as President-COO

So is this all just posturing, using the media as a negotiator? Technically, Redstone has the power to do virtually whatever she wants, as her family holds about 80 percent of the voting shares of both companies. That means she holds the cards.

And the hand Redstone wants played, according to the reports, is for Bakish to be president and chief operating officer of the new CBS. That would drop Moonves’ current righthand man, Joe Ianniello, into some other role — or perhaps, unemployment.

Moonves is reportedly staying loyal to Ianniello. Those on the CBS side believe he has good reason to.

Also Read: Viacom Rejects CBS’ Initial Acquisition Offer

Though Bakish would bring some international experience to the table, many people do not believe he can match Ianniello on financial matters. And Ianniello has the advantage of knowing both companies, because he also worked at Viacom for six years.

Since the two entities split in 2006, Moonves’ CBS has been far more successful than Viacom. To be fair to Bakish, Viacom was led by Philippe Dauman for the lion’s share of the last dozen years, which haven’t always been glory days.

Why mess with a good thing? For Redstone, it is all about access, her critics say. That doesn’t mean she’s on an island with her thinking, however.

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BTIG analyst Rich Greenfield wrote in a note to investors last week that having Moonves lead the combined company would be a mistake. Greenfield said Moonves has a negative view of Viacom’s asset portfolio — and of basic cable in general. He also accused Moonves of being “the key driver behind the failed 2016 merger” of these two companies.

“Moonves has poisoned the Viacom waters for far too long and we simply do not believe Viacom and its employees could flourish under the known dislike of Moonves,” Greenfield wrote. “The future of a combined Viacom and CBS is going to be driven by an increasing focus on international and scaling up, which implies Bakish with Viacom CFO Wade Davis are the proper team, not Moonves and CBS’ COO Joe Ianniello.”

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Others aren’t questioning Moonves, but are questioning his consigliere.

“The contrast between Bob and Joe is pretty clear,” said Tuna Amobi, a media and entertainment analyst for research firm CFRA. “That’s not to say there aren’t people who prefer Joe, but Bob has a significantly diversified skill set, especially on the international side. [Joe’s] never run a public company.”

Viacom did not immediately respond to TheWrap’s request for comment on this story. CBS declined comment.

Also Read: CBS Chief Les Moonves Earned Less in 2017, Still Made $69 Million

Last week, Viacom countered CBS’ initial acquisition offer, adding about 24 percent in valuation to the opening proposal. The counter-offer valued Viacom at $14.7 billion, though since this is an all-stock deal, any ultimate dollar amount tied to a completed transaction would come down to fluctuating share prices.

Initially, CBS had proposed a share exchange ratio of 0.55, which would value Viacom at $11.9 billion. Viacom believed that to be a low-ball offer, CBS does not. At the time the value became public, that first offer placed a dollar amount on Viacom that was below its market cap.

An insider at one of those companies tells TheWrap that the negotiations have been contentious.

Clearly.

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