A Delaware judge on Wednesday essentially called a timeout in the escalating feud between the board of CBS and its controlling shareholder National Amusements, owned by the Redstone family, which wants to merge it with Viacom.
Chancellor Andre Bouchard said he would rule on Thursday on the request for a temporary restraining order (TRO) to prevent Shari Redstone from interfering with a special board meeting on Thursday, when the CBS directors will consider stripping her of control.
Wednesday’s hearing capped three days of maneuvers with little precedent in corporate boardroom battles.
Earlier on Wednesday, National Amusements amended CBS’ bylaws to thwart the company’s directors from issuing a special stock dividend. Under the change, the dividend requires 12 of CBS’ 14 directors to approve the dividend.
That dividend is aimed at cutting National Amusements’ voting power to 17 percent from 80 percent.
National Amusements called the dividend “invalid.”
Bouchard appeared troubled by the move to amend the CBS bylines moments before the court hearing.
“I’ve never seen anything like what transpired here in terms of moving parts before TRO hearing and I need to protect my jurisdiction,” he said. He said he would take the matter under advisement and rule on Thursday regarding the TRO.
The CBS board is set to meet Thursday, but the exact time could not be determined.
National Amusements (NAI) said it was compelled to act to protect its controlling position and the media company.
“NAI believes the irresponsible action taken by CBS and its special committee put in motion a chain of events that poses significant risk to CBS,” National Amusements said in a statement.
In court filings on Wednesday, both sides said they were being forced to take extreme measures. National Amusements said it might have to sack the board to protect its voting power, and CBS said it might have to dilute the Redstones’ voting control to prevent abuses.
The showdown comes as the Redstones were seeking to merge CBS and Viacom to create a company they say will be better able to compete in the media landscape that has been reshaped by the video-streaming companies like Netflix.
A CBS special board committee has resisted that deal, citing in part concerns about corporate governance of the merged company.
National Amusements has said it believed CBS sought a temporary restraining order because National Amusements had raised specific concerns about incidents of bullying and intimidation by one CBS director, Charles Gifford.
“The allegations regarding him (Gifford) are not only vague and unsubstantiated, they are utterly inconsistent with our knowledge of him,” CBS said in a statement.