The most bitter discussion in the boardroom has lately triggered a series of failures, verbal contests, and a physical confrontation with hands on a face that could shape the future of CBS and Viacom.
Shari Redstone, the controlling owner of CBS, has filed a lawsuit against the broadcaster and its executive director Les Moonves at the Delaware Chancery Court, outlining her version of the events in a saga that has played out the former allies against each other.
The submission further reveals Redstone's master plan for CBS and Viacom, which is also under their control. After a merger of the two, she proposes to sell the united company for a much larger sum than both would pick up separately. She has been working on the idea for at least a year, according to sources, but this is the first public reference to this strategy.
From the Complaint:
"Ms. Redstone discussed NAI's long-term plans for CBS and focused on a two-stage process, starting with a merger with Viacom that would strengthen both companies, and then with a sale or one Continuing to merge with NAI As part of this second transaction, he gave up his election control. "
Moonves was receptive to Redstone's plan when she discussed him with him in the second half of last year, people say Meetings are familiar. In January, he still supported a possible merger of CBS and Viacom, according to their complaint.
Given declining sales at Viacom and the dissolution of the larger media industry under the weight of Facebook and Google's growing dominance over viewers and advertisers, Redstone felt it was more necessary to consolidate this business with the more successful CBS, several sources say.
Redstone has said publicly that it would only proceed with a merger if both companies enthusiastically supported the deal. It considered that combining CBS and Viacom would benefit as a larger company would benefit from a better negotiating position in potential business discussions.
She would also be willing to give up her control over the companies after a potential sale.
This month, CBS filed a lawsuit against Redstone, and its board voted to remove its control of the company to prevent it from enforcing a merger with Viacom. CBS claims that Redstone was planning to remove board directors to pave the way for a deal. The outcome of the duel complaints and the lawsuit filed by CBS is expected to be decided in court this summer. A date has yet to be set.
Redstone failed to unite the two companies two years ago, but the idea for the merger sparked off last summer when Verizon CEO Lowell McAdam approached Redstone about a potential deal for CBS. At the time, he also had mentioned interest in some parts of Viacom, say people who are familiar with the matter. Verizon did not respond immediately to a request for comment. Other technology and telecommunications companies turned to Redstone over CBS, the Wall Street Journal reported this week.
Redstone said they have no intention of replacing board members with Ciac with Viacom and have filed a lawsuit a week before CBS against the deal, according to their complaint. The submission challenges CBS's version of the timeline.
The broadcaster and its board called Redstone's court records "not unexpectedly" and continued, "We continue to believe in our position."
That's not it For the first time, Redstone changed her mind about the merger. In 2016, she asked the boards of CBS and Viacom to consider a deal, but changed course after finding that the two companies were more valuable as separate entities.
"The change was to me, oh my god, there's potential here, here's the chance, we can do that," she said on the 2017 stage of the Code conference. She had installed a new management team at Viacom, which prompted her to revise her vision for the company
However, in her complaint filed today, she pointed out that CBS 'lack of interest in the merger would not "discuss it." more productive ".
Sources say that Redstone decided in 2016 that both CBS's reluctance and higher potential value as separate companies led to their pivot.
A big sticking point at the time was Moonves' demand for autonomy over some combined company; he asked for her assurance that she would vote on all corporate matters, where she retired, sources said at the time.
Redstone also cited the actions of CBS director Charles Gifford, which she wanted to remove from the board
In 2016 and 2017, Gifford had acted "intimidating and harassing, including pointing once and instructing her to to listen to him, "it said in her complaint.
Redstone preferred to handle the matter by not returning it to the blackboard.
"Gifford later told her that he did not think anything wrong, and so he treats his daughters if he wishes their attention," reads a footnote read complaint. "Mrs. Redstone clarified that she was not Mr. Gifford's daughter, but instead CBS's vice president."
In one statement, CBS called Redstones allegations "unfounded" and her "problem with Mr. Gifford is that he always by a completely different definition of what it means to be an independent director – acting in the best interests of all CBS shareholders. "