Is Les Moonves Done as CBS CEO?

CBS and its Chief Executive Les Moonves have gone to the mattresses in an effort to subvert the control Shari Redstone and her family’s holding company National Amusements has over the media company.

But if this skirmish doesn’t go the way Moonves and CBS hope — and some analysts don’t think it will — the company’s leadership could be trouble.

“I think Les Moonves is done,” Ross Gerber, CEO of investment firm Gerber Kawasaki, told TheWrap. “I don’t think this ends well for Les or CBS. It’s not his company. He doesn’t own it, and I think he’s going to learn the hard way.”

Also Read: CBS Board Votes to Dilute Shari Redstone’s Controlling Interest

Redstone, despite public pushback from Moonves, has been pressing for CBS and sister company Viacom to merge for the better part of two years.

The CBS board, arguing that Redstone’s pressure has hurt the company and shareholders, voted on Thursday to dilute Redstone’s voting power to 20 percent from nearly 80 percent.

The decision was made, CBS said, in a unanimous vote of the company’s directors who are not affiliated with National Amusements. That is important because the vote isn’t final.

Redstone changed the company bylaws ahead of the board meeting on Thursday, requiring CBS have a 90 percent “supermajority” vote to approve diluting her stake. Redstone effectively controls three seats on the board, which would have made a CBS supermajority vote next to impossible.

Also Read: Inside CBS CEO Les Moonves’ ‘Nuclear Option’ Court Battle Today With Shari Redstone

CBS is set to challenge the validity of the bylaws change and is awaiting a court’s approval on the special dividend that would dilute Redstone’s control. CBS said on Thursday that it doesn’t believe the changes are valid or effective.

There’s no legal precedent for the CBS board is doing, so how the court will rule isn’t clear.

“It’s hard to imagine Les Moonves being in that job much longer now, unless CBS comes out on top, and the odds, in my perspective, seem to be in National Amusements’ favor,” media analyst Tuna Amobi, of investment research firm CFRA, told TheWrap.

Moonves’ current contract runs through 2021, and if he’s removed before then, the company could be on the hook to pay him more than $184 million.

But Redstone also isn’t afraid to go to war with her company’s leadership and oust a CEO. Just ask Philippe Dauman, who Redstone pushed out at Viacom in a messy tug-of-war for control back in 2016.

Needham analyst Laura Martin wrote in a note to investors on Friday that any scenario where Moonves leaves would be the worst case for CBS shareholders, predicting shares dropping 14 percent if that happens. That would be a $10 billion  swing of total value across all the company’s shareholders, compared to the perceived value were CBS to be acquired by a telecom company like Verizon, she said.

National Amusements will want to find a resolution that is in the interests of all shareholders, a person familiar with the situation told TheWrap.

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

“[Moonves] is a great executive and he’s done a great job leading that company, but now Les and Shari have both hurt the company,” Gerber said. “Her request to remerge the two companies is not a crazy request and after all this I think it’s still not going to be his company.”

Gerber said that if National Amusements comes out on top, he expects Redstone to take a similar approach she did at Viacom in 2016: Remove the CEO and call a shareholder vote to replace the board.

Related stories from TheWrap:

CBS Shares Sink 5 Percent After Court Blocks Attempts to Stop Shari Redstone’s Involvement

Viacom Shares Plummet After CBS Sues to Block Merger

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

CBS and its Chief Executive Les Moonves have gone to the mattresses in an effort to subvert the control Shari Redstone and her family’s holding company National Amusements has over the media company.

But if this skirmish doesn’t go the way Moonves and CBS hope — and some analysts don’t think it will — the company’s leadership could be trouble.

“I think Les Moonves is done,” Ross Gerber, CEO of investment firm Gerber Kawasaki, told TheWrap. “I don’t think this ends well for Les or CBS. It’s not his company. He doesn’t own it, and I think he’s going to learn the hard way.”

Redstone, despite public pushback from Moonves, has been pressing for CBS and sister company Viacom to merge for the better part of two years.

The CBS board, arguing that Redstone’s pressure has hurt the company and shareholders, voted on Thursday to dilute Redstone’s voting power to 20 percent from nearly 80 percent.

The decision was made, CBS said, in a unanimous vote of the company’s directors who are not affiliated with National Amusements. That is important because the vote isn’t final.

Redstone changed the company bylaws ahead of the board meeting on Thursday, requiring CBS have a 90 percent “supermajority” vote to approve diluting her stake. Redstone effectively controls three seats on the board, which would have made a CBS supermajority vote next to impossible.

CBS is set to challenge the validity of the bylaws change and is awaiting a court’s approval on the special dividend that would dilute Redstone’s control. CBS said on Thursday that it doesn’t believe the changes are valid or effective.

There’s no legal precedent for the CBS board is doing, so how the court will rule isn’t clear.

“It’s hard to imagine Les Moonves being in that job much longer now, unless CBS comes out on top, and the odds, in my perspective, seem to be in National Amusements’ favor,” media analyst Tuna Amobi, of investment research firm CFRA, told TheWrap.

Moonves’ current contract runs through 2021, and if he’s removed before then, the company could be on the hook to pay him more than $184 million.

But Redstone also isn’t afraid to go to war with her company’s leadership and oust a CEO. Just ask Philippe Dauman, who Redstone pushed out at Viacom in a messy tug-of-war for control back in 2016.

Needham analyst Laura Martin wrote in a note to investors on Friday that any scenario where Moonves leaves would be the worst case for CBS shareholders, predicting shares dropping 14 percent if that happens. That would be a $10 billion  swing of total value across all the company’s shareholders, compared to the perceived value were CBS to be acquired by a telecom company like Verizon, she said.

National Amusements will want to find a resolution that is in the interests of all shareholders, a person familiar with the situation told TheWrap.

“[Moonves] is a great executive and he’s done a great job leading that company, but now Les and Shari have both hurt the company,” Gerber said. “Her request to remerge the two companies is not a crazy request and after all this I think it’s still not going to be his company.”

Gerber said that if National Amusements comes out on top, he expects Redstone to take a similar approach she did at Viacom in 2016: Remove the CEO and call a shareholder vote to replace the board.

Related stories from TheWrap:

CBS Shares Sink 5 Percent After Court Blocks Attempts to Stop Shari Redstone's Involvement

Viacom Shares Plummet After CBS Sues to Block Merger

CBS Sues Parent Company to Dilute Shari Redstone's Voting Power, Stop Viacom Merger

Media Analyst To Shari Redstone On CBS: “Choose Between Winning The Battle And Losing The War”

One prominent media analyst is calling on Shari Redstone’s National Amusements to hold a public auction for CBS to determine its fair market value and help evaluate whether Viacom is the best match. “It’s up to Shari Redstone to chose…

One prominent media analyst is calling on Shari Redstone’s National Amusements to hold a public auction for CBS to determine its fair market value and help evaluate whether Viacom is the best match. “It’s up to Shari Redstone to chose between winning the battle and losing the war,” wrote Needham & Co.’s Laura Martin. Martin told Deadline that “it would be irresponsible” for National Amusements to press for a merger with Viacom before hiring an investment banker and…

CBS Halts Tomorrow’s Annual Shareholder Meeting Following Board Vote Showdown

After a week of dramatic legal skirmishes with Shari Redstone and National Amusements in its battle to stop a proposed merger with Viacom, CBS today decided to hit the pause button on Friday’s long scheduled annual shareholder’s meeting.
“In light of t…

After a week of dramatic legal skirmishes with Shari Redstone and National Amusements in its battle to stop a proposed merger with Viacom, CBS today decided to hit the pause button on Friday's long scheduled annual shareholder's meeting. "In light of the recent actions by NAI and the pending litigation in the Delaware Chancery Court, the Board of Directors determined to postpone its 2018 annual meeting of stockholders that was previously scheduled to take place tomorrow,"…

Showdown At Black Rock As Shari Redstone Set For CBS Board Meeting – Update

UPDATED WITH REDSTONE ATTENDANCE INFO: Rallying this week as the company sought to assert its independence over its controlling shareholder, CBS’ stock tumbled back to earth today after a Delaware judge denied the company’s legal moves and …

UPDATED WITH REDSTONE ATTENDANCE INFO: Rallying this week as the company sought to assert its independence over its controlling shareholder, CBS’ stock tumbled back to earth today after a Delaware judge denied the company’s legal moves and the board is set to vote on a dilution measure that now is largely symbolic. A vote that will see a face-off at Black Rock between CEO Les Moonves, whose independent directors led the court challenge, and Shari Redstone

CBS Shares Sink 5 Percent After Court Blocks Attempts to Stop Shari Redstone’s Involvement

After taking a punch to the gut in the courtroom on Thursday, CBS took another blow on Wall Street soon after, following its request for a temporary restraining order against Shari Redstone and her holding company, National Amusements, which was struck down.

Shares of CBS dropped nearly 5 percent in midday trading in the aftermath, hitting $51.16 a share.

CBS dropped more than 2 points on Thursday (via Google)

 

Also Read: Inside CBS CEO Les Moonves’ ‘Nuclear Option’ Court Battle Today With Shari Redstone

Chancellor Andre Bouchard of Delaware’s Court of Chancery pulled back a temporary restraining order that had been granted on Wednesday. The judge had issued the 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.

“I am not convinced that the harm plaintiffs fear would be irreparable,” said Chancellor Bouchard, according to The New York Times. “To the contrary, the court has extensive power to provide redress if Ms. Redstone takes action(s) inconsistent with the fiduciary obligations owed by a controlling stockholder.”

CBS had argued the restraining order was necessary to keep Redstone from capriciously switching directors on its board. The court said the restraining order wasn’t necessary because the company can legally challenge board maneuvers from Redstone.

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

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

Through National Amusements, Redstone owns roughly 79 percent of the voting power in CBS and Viacom, which she has been trying to push to merge.

The restraining order would have prevented Redstone and National Amusements from getting involved in CBS’ board meeting on Thursday. CBS has considered issuing a stock dividend that would dilute Redstone’s interest to 17 percent from 79 percent. The company has said it’s open to exploring other options as well.

Related stories from TheWrap:

CBS Loses Court Bid to Block Shari Redstone’s Maneuvers

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

Watch Trailers for CBS’ New Fall TV shows: ‘Murphy Brown,’ ‘FBI’ and ‘The Neighborhood’ (Videos)

After taking a punch to the gut in the courtroom on Thursday, CBS took another blow on Wall Street soon after, following its request for a temporary restraining order against Shari Redstone and her holding company, National Amusements, which was struck down.

Shares of CBS dropped nearly 5 percent in midday trading in the aftermath, hitting $51.16 a share.

CBS dropped more than 2 points on Thursday (via Google)

 

Chancellor Andre Bouchard of Delaware’s Court of Chancery pulled back a temporary restraining order that had been granted on Wednesday. The judge had issued the 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.

“I am not convinced that the harm plaintiffs fear would be irreparable,” said Chancellor Bouchard, according to The New York Times. “To the contrary, the court has extensive power to provide redress if Ms. Redstone takes action(s) inconsistent with the fiduciary obligations owed by a controlling stockholder.”

CBS had argued the restraining order was necessary to keep Redstone from capriciously switching directors on its board. The court said the restraining order wasn’t necessary because the company can legally challenge board maneuvers from Redstone.

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

Through National Amusements, Redstone owns roughly 79 percent of the voting power in CBS and Viacom, which she has been trying to push to merge.

The restraining order would have prevented Redstone and National Amusements from getting involved in CBS’ board meeting on Thursday. CBS has considered issuing a stock dividend that would dilute Redstone’s interest to 17 percent from 79 percent. The company has said it’s open to exploring other options as well.

Related stories from TheWrap:

CBS Loses Court Bid to Block Shari Redstone's Maneuvers

Les Moonves Jokes About Messy Legal Drama at CBS Upfront: 'How's Your Week Been?'

Watch Trailers for CBS' New Fall TV shows: 'Murphy Brown,' 'FBI' and 'The Neighborhood' (Videos)

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