CBS shareholders have officially launched a class action lawsuit against its majority stakeholder National Amusements, the investment firm of Sumner Redstone and family.
The suit claims that National Amusements, now run by Redstone’s daughter Shari Redstone, has breached its fiduciary duty.
Class B shareholders of CBS claim that Redstone has not acted in the company’s best interest in its push to merge the business with former partner company Viacom.
CBS’ lawsuit document states: “Sumner Redstone is no longer in control of CBS. His daughter has seized control, interfered with the management of the company and pressured the company to pursue her self-interested plan to combine CBS with Viacom.”
The news follows earlier action taken by the company in May to block Redstone’s efforts to forcibly merge the companies. Prior to the recent lawsuit a Delaware Chancery Court judge had put a brief pause on the legal battle during CBS’ Upfront presentation in which Leslie Moonves received a standing ovation.
National Amusements has replied in a statement saying it is merely exercising its legal rights to change CBS bylaws.
“Furthermore, as detailed in NAI’s complaint, the efforts of the CBS Directors to unilaterally dilute the voting rights of its controlling shareholder are extraordinary, unjustified and unlawful. We are confident the court will uphold NAI’s action,” said the firm.
National Amusements currently controls near 80% of CBS and Viacom, while owning just 10% of shares. Redstone recently made a bylaw change that would require approval of 90% of the board to provoke action within the company. CBS has worked to overturn the bylaws and reduce the firm’s control to around 20%.
The Redstone family has made multiple attempts to bring CBS and Viacom back together since its split in 2006. When the company tried to do so in 2016, the move was ultimately abandoned.
The latest move began in January and has resulted in a range of suing and counter-suing among CBS shareholders.
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18th January 2020