Redstone family wins latest fight over control of CBS

A Delaware court has handed CBS majority shareholder National Amusements an important legal victory as the companies tussle for control of the broadcaster. 

In lifting a restraining order on National Amusements, Chancellor Andre Bouchard’s ruling lets the company challenge a planned vote on Thursday by CBS’s board of directors on whether to issue a dividend that would dilute National Amusement’s preferred stock voting power from 80 percent to 17 percent. 

Such a move would have effectively given CBS independence from National Amusements.

CBS had sought the restraining order to block Shari Redstone, president and controlling shareholder of National Amusements, from replacing members of its board of directors. The decision could boost Redstone in her efforts to merge CBS with entertainment giant Viacom, which National Amusements also controls.

CBS has said combining with Viacom is not in the best interests of shareholders. The broadcaster on Monday filed suit to stop National Amusements from interfering with the board meeting to consider the dividend. 

Although Bouchard said there was no legal precedent for granting CBS’s request for a restraining order, he said the company could challenge National Amusements in court if it takes actions that could harm shareholders. In a statement, CBS signaled that it may pursue further legal action against National Amusements.

“The judge today found that the allegations in our lawsuit ‘are sufficient to state a colorable claim for breach of fiduciary duty against Ms. Redstone and NAI as CBS’s controlling stockholder,'” CBS said. “We could not agree more. While we are disappointed that the judge did not grant a [temporary restraining order], 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 do so.”

CBS said it plans to proceed with Thursday’s meeting, saying the “dividend would more closely align economic and voting interests of CBS stockholders without diluting the economic interests of any stockholder.”

Shari Redstone is the daughter of media magnate Sumner Redstone, who led National Amusements to take over Viacom in 1987 and, in 2000, CBS. Viacom and CBS split in 2006.

A spokesperson for National Amusements did not immediately respond to a request for comment.

National Amusements owns a majority of the voting shares in both CBS Corp. and Viacom, the media company behind Paramount Studios and the cable networks Comedy Central, MTV and BET. 

CBS is the corporate parent of CBS News and CBS MoneyWatch. 

Shares of CBS fell 6 percent on news of the judge’s ruling, while shares of Viacom were down 0.8 percent. 

— The Associated Press contributed to this report