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Published: Tue, May 15, 2018
Economy | By Melissa Porter

CBS declares war on Shari Redstone over Viacom merger

CBS declares war on Shari Redstone over Viacom merger

On Wednesday, the company will hold its 2018-2019 Upfront presentation in NY.

In its lawsuit, CBS cited the battle for control of publisher Hollinger International Inc, which like CBS had a controlling shareholder, Conrad Black, who wanted to sell control of the company over opposition from the board.

On Monday, CBS filed a lawsuit against National Amusements and its president, Shari Redstone, to block it from forcing the merger.

"The five members of CBS's special committee, all independent directors of the company, unanimously believe that the CBS Board has a fiduciary duty to act now to protect all stockholders and prevent Ms. Redstone from continuing to misuse her power as a controller, in breach of her fiduciary duties", the suit continues.

It then lists a number of ways that Shari has allegedly abused her power to undermine the board and hijack control for herself and National Amusements.

Legal experts said the lawsuit was a rare example of a company attempting to use a "nuclear option" to free itself from its controlling shareholder, setting the stage for a high-stakes legal battle over the future of one of the biggest USA entertainment companies.

National Amusements, which controls CBS and Viacom, has been trying to merge the two companies.

"(CBS is) at least sending the signal and creating evidence they had the best interests of everyone in mind, and not her", said Brian Quinn, a professor at the Boston College Law School, referring to Shari Redstone. The move would allow the company to "more fully evaluate strategic alternatives".

CBS said in February it had established a committee to consider reuniting the two companies, combining CBS with Viacom's networks, which include Nickelodeon, MTV, BET and Comedy Central. The stock decreased 6.98% or $2.11 during the last trading session, reaching $28.11.

Shares of CBS were up more than 3 percent in morning trade on May 14 while Viacom shares declined almost 7 percent.

National Amusements, a privately held movie theater company owned by Sumner Redstone and his daughter Shari, own a majority of the voting shares in both companies.

"Ensuring the long-term success of CBS continues to be NAI's sole interest". Sumner Redstone's iPad has a button for moments like these, but National Amusements used tamer language: It is "outraged" and committed "to a well-governed process", adding that it had no intention to replace CBS's board or force a deal that wasn't supported by both sides. "We intend to defend our position vigorously and look forward to presenting our arguments in court".

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