Controlling shareholder National Amusements Inc. escalated its legal dispute with CBS Corp. by filing a lawsuit against the media company's Chairman, President and CEO, Leslie Moonves, and most of the CBS board.
In a complaint filed in Delaware Chancery Court, NAI asked the court to stop CBS' board from trying to dilute the shareholder's voting control in the company. Also, NAI challenged the legality of Moonves' severance package.
"As NAI's complaint makes clear there was no 'threat' or 'interference,' and indeed there was no action that could possibly warrant the CBS directors' unprecedented, unjustified, and unlawful efforts to unilaterally dilute NAI's voting rights," the shareholder argued in a statement, adding that none of the defendants is entitled to strip NAI of its voting control.
In an emailed statement, CBS said the lawsuit from NAI "was not unexpected."
The suit comes after CBS unveiled plans to challenge bylaw amendments put forth by NAI. The media company said in an SEC filing that the "purported" bylaw amendments were invalid under Delaware law and cannot become effective under controlling federal law and SEC rules until 20 days after the information statement is distributed to stockholders. As a result, CBS Corp. said the board's decision to declare a dividend intended to dilute NAI's voting interest was not subject to the amendments.
A Delaware judge ruled May 17 to deny CBS Corp.'s request for a temporary restraining order against National Amusements ahead of the board meeting to consider the special dividend. If effected, the dividend would dilute National Amusements' voting interest in the programmer to 17% from about 79%. CBS said May 29 that it continues "to believe firmly in our position."
For months, National Amusements' leadership has been pushing for a merger between CBS and Viacom Inc., which is similarly controlled by National Amusements.
