• by Wayne Friedman , May 14, 2018

As part of an effort to loosen control by its parent and controlling company -- effectively stopping it from merging with Viacom -- CBS has filed a lawsuit against National Amusements alleging “breaches of fiduciary duty.”

CBS claims that National Amusements is seeking to prevent it from interfering with a special meeting of the CBS Board of Directors -- where it wants to issue a special dividend of common stock, which would dilute National Amusements’ voting interest to 17% from 79%.

As permitted under CBS’ charter, the network says it could declare a dividend of shares of Class A common stock to all the Company’s Class A and Class B stockholders. The dividend would not dilute CBS stockholders holdings.

“If consummated, the dividend would enable the company to operate as an independent, non-controlled company and more fully evaluate strategic alternatives,” CBS stated.

Mid-Monday morning trading of CBS stock was up 1.2% to $53.23; Viacom was down 7% to $28.15.

In recent months, Shari Redstone, president of National Amusements and vice chair of both CBS and Viacom, has pushed for CBS and Viacom to re-merge. The companies separated as independent companies in late 2006. National Amusements also controls around 80% of the voting shares of Viacom.

According to reports, CBS has long been reluctant to do the deal, first starting in 2016, when Redstone initially pushed the idea.  

A renewed effort in recent months had CBS offered a plan to acquire Viacom for what Viacom believes was an underpriced agreement.

In addition, in the proposed deal, Les Moonves, chairman/CEO of CBS would run the combine company, with Joe Ianiello, CBS’ COO, becoming the No. 2 executive -- leaving out Bob Bakish, president/CEO of Viacom.