Home LIFESTYLE Style News “It Is Unfortunate and Revealing”: The War Between Shari Redstone and Les Moonves Is Going Nuclear

“It Is Unfortunate and Revealing”: The War Between Shari Redstone and Les Moonves Is Going Nuclear

12 min read
0
21

Sponsored links

Decades of pent-up frustration with the Redstone family’s control of CBS and Viacom is finally exploding into plain sight in much the same way, and with as much potentially destructive force, as the Kilauea volcano. Just like the Kilauea lava flows on the large island of Hawaii, events are moving quickly between Shari Redstone, who has stepped into her ailing father’s shoes as the driving force behind both companies, and the board and management of CBS. The gloves are off and the rope-a-dope has begun.

On Sunday, the special committee of the CBS board of directors and its special board committee, voted unanimously to stop the negotiations on a merger with Viacom, and give up on the discussions. It also latched on to the clever idea, in keeping with the CBS charter, that a huge amount of new shares could be issued to the non-Redstone shareholders that would dilute the controlling family’s voting power down from 80 percent to 17 percent, rendering the Redstones virtually impotent. A CBS board meeting to discuss the new plan was set for Thursday afternoon at 5 P.M. Meanwhile, the special board committee appeared sufficiently worried that Shari would try to block the full CBS board from meeting that the network’s lawyers asked a Delaware judge on Monday morning for a temporary restraining order against her to prevent possible interference. As surprising as all that was, Shari fought back on Wednesday morning with a move that effectively changed the CBS charter in real time to prevent the board from voting to issue the new stock. (On Wednesday night, a modified version of CBS’ temporary restraining order was granted with a more permanent decision expected sometime on Thursday.)

It’s not exactly clear what happens next. The temporary restraining order, if granted Thursday, could buy time for the CBS board to meet to try to declare the dividends. It presumably has the votes it needs to do so: of the 14-member board, the only obvious “no” votes are likely coming from Shari, Rob Klieger (her father’s new attorney) and David Andelman (her father’s longtime friend). But there is also likely to be a 20-day waiting period before the changes to the CBS charter that Sheri wants—namely, preventing the board from issuing the new stock—can occur.

In the near term, all is flux, as Heraclites once observed. In the longer term, the Delaware courts will have to decide whether CBS can issue the dividends to dilute the Redstones’ power. But beyond that, the damage between Shari and CBS, and between Shari and the CBS board and management, appears nearly irreparable. There is seemingly no return from this abyss. It’s an incredibly high-stakes gamble for all sides. If Shari wins, the CBS board and its management are likely toast. If CBS wins, then it will be free to pursue its own future, having finally thrown off the Redstone yoke after 18 years.

The backdrop for the feud between Shari and CBS is her seemingly Oedipal desire to supersede her 94-year-old father, Sumner Redstone, who banished her from the family business before a complex change of heart a few years back. For at least two years now, Shari has wanted to put CBS and Viacom back together, even though Sumner took them apart intentionally 12 years ago, largely because they were in different businesses and didn’t belong together in the first place. Shari’s first attempt to remarry CBS and Viacom, in 2016, flamed out. Then, last August, she started a new process to put the two companies back together again. There still is not much of an industrial logic, other than the amorphous idea that, in this world of massive scale, the companies are too small to survive alone. A merger, of course, would also make it easier for the Redstone family to get liquidity down the road if it can sell a combined company to whatever behemoth company might be interested in it: among them, Verizon, Apple, Amazon, Google, or maybe Facebook.

Shari appeared to do all the right things to create an independent process. Both company’s boards of directors created independent special committees to consider the merger. Both hired investment bankers and lawyers. Shari, a vice chairman of the board at both CBS and Viacom, stayed off the independent committees. But when negotiations commenced, there was plenty of disagreement. There was a growing irritation on the CBS side with Shari’s insistence that Bob Bakish, the new Viacom C.E.O., needed to be the successor to Les Moonves, the CBS C.E.O., or that Bakish needed to be a member of the new board of directors. National Amusements, the Redstone family holding company, has claimed that the two independent committees had reached a “provisional agreement on economic terms” of a deal and then began to circulate the agreed upon exchange ratio of .6135, according someone familiar with the deal. But CBS issued a statement denying there had been an agreement on an exchange ratio, or anything close to a deal. “There could not be a deal on price in isolation from the other aspects of the transaction,” a company spokesman said. While the negotiations slogged on, the market voted: it hated the idea of the recombination, shaving some $6.5 billion off CBS’s value since August. (The CBS stock has recovered in recent days as the legal wrangling dimmed the prospects for a deal.)

More recently, there was the vague McCarthy-esque accusation lobbed by Rob Klieger against his fellow CBS board member Chad Gifford. Gifford is the former Chairman emeritus of Bank of America, a member of the CBS special committee, and an ardent advocate for shareholder rights. In an affidavit filed on Wednesday, Klieger noted that Shari and National Amusements, known as N.A.I., were “discomfort[ed]” by Gifford’s continued tenure on the CBS board “given incidents that took place in 2016 and 2017” and wanted him removed. Klieger kindly offered to help facilitate his fellow board member’s removal from the board “with minimal disruption and public attention.” CBS reacted harshly to the innuendo directed toward Gifford. “It is unfortunate and revealing that N.A.I. has resorted to baseless personal attacks against a member of the CBS Board and its Special Committee as part of its response to the CBS action,” it said in a public statement. The allegations regarding him are “not only vague and unsubstantiated, they are utterly inconsistent with our knowledge of him.”

This one just keeps getting weirder and weirder, and isn’t over yet, not by a long shot. Judges have to rule. Boards have to vote. The narrative must reach its ugly conclusion. Someone has to be defenestrated: either Shari Redstone or Les Moonves. If Showtime weren’t part of the CBS family, the internecine warfare would make one hell of a dramatic series, don’t you think? It’s upfront week after all.

Sponsored links
Source link

Load More Related Articles
Load More In Style News
Comments are closed.

Check Also

The Brooklyn Museum’s Night of 1,000 Bowies Was a Night to Be Yourself

The “David Bowie Is” exhibit has been open at the Brooklyn Museum for more than two months…