CBS Sued by Investor Seeking Files on $11.7 Billion Viacom Deal
CBS Sued by Investor Seeking Files on $11.7 Billion Viacom Deal
(Bloomberg) -- A CBS Corp. investor asked a judge to force the broadcaster to turn over files about its $11.7 billion merger with Viacom Inc. so it can determine whether the deal unfairly benefits Shari Redstone, the companies’ controlling shareholder.
The deal, set to close in the first week of December, may have resulted from “potential wrongdoing” by Redstone, Corinne Amato, an attorney for the Bucks County Employees Retirement Fund, told a Delaware judge on Friday.
“Nobody likes this deal, beyond Shari Redstone,” Amato told Delaware Chancery Judge Joseph Slights III, who said he’d rule on the fund’s document request early next week.
The stock-for-stock merger is a long-sought reunion of CBS and Viacom -- one entity until 2006 -- engineered by Redstone over CBS executives’ vehement opposition, a lawyer for the Pennsylvania-based pension fund told the court. It will join the broadcast network with the parent of Paramount Pictures and cable channels such as MTV and Nickelodeon and top off three years of corporate infighting over Redstone’s push to bring the media companies back together.
The complaint is a “books and records” action, filed to seek documents that could be used in a suit to challenge the deal.
CBS and Viacom, both based in New York, were a single company until the Redstone family decided investors would give them greater value separately. That strategy didn’t work as well as expected, and there have been sporadic efforts to recombine them in recent years.
CBS executives led by Les Moonves, then the chief executive officer, derided Redstone’s recombination plan last year as “having no economic or strategic rationale,” according to court filings.
After Moonves was forced out over sexual-harassment claims, Redstone, whose National Amusements Inc. controls both companies, was able to push the merger forward. She took over as National Amusements’ leader after illness forced her billionaire father, Sumner Redstone, to relinquish the reins.
CBS’s lawyers say a special board committee, which didn’t include Shari Redstone, approved the merger deal and that the process was in no way tainted.
“Everything’s changed this year over last year,” Jonathan Youngwood, CBS’s attorney, told Slights. “It’s a different time, different decision makers and a different offer on the table.”
Youngwood defended Shari Redstone’s decision to offer a $100 million pay package to CBS Corp.’s acting CEO, Joe Ianniello, who will stay on after the merger but not as the company’s top executive. Viacom CEO Bob Bakish will become the merged company’s CEO.
The pension fund contends Ianniello opposed the tie-up in 2018 while Moonves’s deputy, and it wants to see files about the compensation deal to probe the executive’s “sudden change of heart,” according to court filings.
The case is Bucks County Employees Retirement Fund v. CBS Corp., 2019-0820, Delaware Chancery Court (Wilmington).
To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Jeffrey, Anthony Lin
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