CBS board weakens Redstone’s hold as feud intensifies

Shari Redstone showed up at the CBS board meeting she tried to scuttle only to witness a majority of directors vote to dilute her stake in the Tiffany Network.

All Les Moonves-friendly directors not affiliated with Redstone-controlled National Amusements Inc. voted to issue a pro rata dividend to both Class A and Class B shareholders — a move that would reduce Redstone’s voting power to 20 percent.

“The Board of Directors has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders’ interests and would unlock significant stockholder value,” CBS said in a statement.

CBS said its newly declared dividend would be “conditioned on a final determination by the Delaware courts,” including the exhaustion of all appeals.

Citing pending litigation between the two companies, CBS then decided at the meeting to postpone the 2018 annual shareholders meeting it had scheduled for Friday.

The Redstone family, through National Amusements, currently owns 79.6 percent of the voting shares.

The company’s board went ahead with the meeting despite a court ruling Thursday morning denying CBS efforts to keep Redstone from meddling with the vote.

The ruling by Judge Andre Bouchard of Delaware’s Chancery Court rescinded the temporary restraining order he issued Wednesday.

Lifting the TRO handed CBS CEO Moonves an unsavory defeat and set the stage for an even more acrimonious court showdown.

A CBS special committee had determined the dividend was key to keeping Redstone from merging CBS with Viacom, which the family also controls through its ownership of 80 percent of that company’s voting shares, the committee said.

“The merger is not in the best interests of all CBS stockholders,” the special committee said in court papers.

NAI said after the CBS board meeting that “it has no intention of forcing a merger that is not supported by both CBS and Viacom.” It then dismissed CBS efforts to prevent such a transaction as “pure pretext.”

“CBS management and the special committee cannot wish away the reality that CBS has a controlling shareholder,” NAI said in a statement.

Less than an hour before Wednesday’s court hearing, NAI moved to change CBS bylaws to require a super-majority vote — or a 90 percent vote, meaning 13 of the 14 CBS board members — to allow such a dividend.

Bouchard, who observers said will likely see both parties back in court very soon, acknowledged the lack of precedent, saying no “court has ever entertained, much less sanctioned, the type of request for relief that plaintiffs make here.”

But he added his denial of the TRO was based on CBS’ future right to pursue judicial review should NAI move to kick a member from the board.

CBS stock sank 4.1 percent in Thursday trading, to close at $51.61 per share. Viacom shares fell by 11 cents, to $28.16.