The future of CBS, one of America’s beloved television brands, may be decided this week.
CBS Corporation, led by CEO Leslie Moonves, is seeking a temporary restraining order against its controlling shareholder National Amusements.
The battle is pitting Moonves against National Amusements president Shari Redstone, who wants CBS and sister company Viacom to consider merging.
Arguments will be heard in Delaware Chancery Court on Wednesday afternoon.
The timing is critical because CBS is planning to hold a special board meeting on Thursday. The intent is to vote on a dividend that would cut Redstone’s voting stake in the company from approximately 80% to 17%.
It’s a highly unusual move for CBS — and it could end with Moonves being booted from the company he has led for decades.
Moonves has a sterling reputation in the entertainment industry and on Wall Street. He has been at odds with Redstone, and the independent board members of CBS are siding with him.
Five board members filed suit for a temporary restraining order on Monday morning. CBS said the suit was designed to stop Redstone “from interfering” in Thursday’s vote.
“The Special Committee members, all independent directors of the Company, unanimously believe that the CBS Board has a fiduciary duty to act now to protect all stockholders and prevent Ms. Redstone from further breaches of her fiduciary duties,” the CBS suit stated.
National Amusements (NAI) responded in a brief to the court on Wednesday morning.
“Plaintiffs suggest that NAI intends to force such a merger by removing and replacing the CBS independent directors. There is no truth to that,” lawyers for National Amusements wrote. “NAI does not have, and has never had, any intention of replacing the CBS Board or taking other action to force a merger.”
National Amusements asserted that the CBS board members are attempting “an unprecedented usurpation of a controlling stockholder’s voting power.”
Wednesday afternoon, the company moved to prevent CBS from cutting Redstone’s voting stake by changing the CBS bylaws. The amendment requires board actions, like the one in question, to be approved by a supermajority of the CBS board of directors.
“NAI believes the irresponsible action taken by CBS and its special committee put in motion a chain of events that poses significant risk to CBS,” the company said in a statement.
The corporate drama is playing out during one of the CBS network’s busiest weeks of the year.
It’s “upfront” week, full of splashy presentations to advertisers. CBS will promote its shows at Carnegie Hall Wednesday at 4 p.m.
Moonves was a no-show at CBS’s traditional press breakfast on Wednesday morning.
“Les always enjoys this event. But when the number of questions he could answer outweighed the number he could not answer, he thought it was a good idea to sit this one out,” CBS Entertainment chief Kelly Kahl said.
— CNN’s Jill Disis contributed reporting.
CNNMoney (New York) First published May 16, 2018: 11:37 AM ET