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1 Month : From Apr 2018 to May 2018
By Keach Hagey and Joe Flint
CBS Corp. and its controlling shareholder National Amusements Inc. are so entrenched in a power struggle that they can't even agree on the outcome of a board vote.
On Thursday, CBS said its board voted to strip National Amusements President Shari Redstone and her family of their voting control over the media company. CBS said the 11 of the 14 board members not affiliated with National Amusements supported the proposal.
But that tally fell short of the threshold the Redstones believe is required for approval after they moved to amend the company's rules on Wednesday.
The boardroom drama sets the stage for what could become a prolonged legal battle over governance of the media giant. At the heart of the fight is CBS's contention that Ms. Redstone is trying to force it to merge with Viacom Inc., the other media company in the family's empire.
The battle could have significant ramifications for the broader media landscape, determining the leadership and ownership of the TV powerhouse, and whether it will remain independent.
CBS said its directors approved a stock dividend that would dilute National Amusements' voting power from nearly 80% to about 20%. Normally, such a proposal would require a majority vote. But National Amusements amended the company's bylaws on Wednesday to require 90% of board members to approve such a move. That is the reason the two sides now have different interpretations of the outcome of the board meeting.
CBS said the dividend won't take effect until Delaware courts have determined it is permissible.
"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 also said it has postponed its annual meeting, which was scheduled for Friday.
In the wake of the vote, National Amusements said the board's plans to issue a dividend are invalid.
"CBS management and the special committee cannot wish away the reality that CBS has a controlling shareholder," National Amusements said in a statement. "NAI yesterday exercised its legal right to amend the company's bylaws to require a supermajority vote on certain board actions with respect to dividends, effective immediately. In light of the Board's action today, that action was plainly necessary, and it is valid."
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(END) Dow Jones Newswires
May 17, 2018 19:22 ET (23:22 GMT)
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