The Redstone family sought on Wednesday to amend CBS’ bylaws to prevent its board of directors coming from issuing a special stock dividend which could eliminate much of its voting power, as a court room showdown between them loomed.
The move came after National Amusements Inc (NAI), the Redstone movie theater company which controls CBS in addition to also peer Viacom, said in a court filing earlier on Wednesday which a CBS proposal to strip its voting control through the dividend is usually “invalid”, in addition to also urged a judge to rule against CBS at a 2 p.m. ET hearing in Wilmington, Delaware on Wednesday.
CBS is usually seeking a restraining order to prevent Shari Redstone coming from rewriting its bylaws or sacking directors ahead of a board meeting on Thursday. This particular was not immediately clear how National Amusements’ decision to change the bylaws, to make the dividend’s approval subject to a supermajority of CBS’s board of directors, could affect the court’s decision.
“NAI believes the irresponsible action taken by CBS in addition to also its special committee put in motion a chain of events which poses significant risk to CBS. Due to the magnitude of This particular threat, NAI was compelled to take This particular measured step to protect its position while also mitigating further disruption to CBS,” National Amusements said in a statement.
CBS had said its board was considering a special dividend which could dilute National Amusements’ voting power to 17 percent coming from 80 percent, a move legal experts called a “nuclear option.”
In court filings on Wednesday, both sides said they were being forced to take extreme measures. National Amusements said This particular might have to sack the board to protect its voting power, in addition to also CBS said This particular might have to dilute the Redstones’ voting control to prevent abuses.
National Amusements requested the Delaware court deny the restraining order in addition to also said in court papers CBS rejected an offer of a standstill agreement which required the latter to drop its plan for the special dividend.
The showdown comes as the Redstones are seeking to merge CBS in addition to also Viacom to create a company they say will be better able to compete inside the media landscape which has been reshaped by the likes of video-streaming company Netflix.
A CBS special board committee has resisted which deal, citing in part concerns about corporate governance of the merged company.
National Amusements said on Monday This particular believed CBS sought a temporary restraining order because National Amusements had raised specific concerns about incidents of bullying in addition to also intimidation by one CBS director, dating back to 2016.
On Wednesday, in its court filing, National Amusements identified which CBS board director as Charles Gifford, an independent director in addition to also member of the special committee.
“The allegations regarding him (Gifford) are not only vague in addition to also unsubstantiated, they are utterly inconsistent with our knowledge of him,” CBS said in a statement.