Published: Tue, May 15, 2018
Finance | By Claude Patterson

CBS, Viacom had agreed on price for deal before lawsuit, sources say

CBS, Viacom had agreed on price for deal before lawsuit, sources say

Redstone filled Sumner Redstone's newly vacant board seat with the Redstones' personal lawyer, who has since been instructing management and other directors on Ms. Redstone's and National Amusements' wishes, including the desire to replace certain directors.

Shari Redstone, who wants the merger between the two companies, is accused of "breaching her fiduciary duty to CBS shareholders in her pursuit of a CBS-Viacom merger".

Sumner Redstone split his media empire into two pieces 12 years ago, creating CBS and Viacom in their present form.

Multiple sources say Verizon had been involved in high-level discussions with CBS a year ago.

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

CBS Corp.is claiming that Ms. Redstone has acted to undermine CBS's management team, including, without board authority, talking to potential CEO replacements, ridiculing the COO and threatening to change the board.

THR also reports this nugget: "A committee of independent directors at CBS has called for a meeting May 17 with the intention of issuing a dividend that would dilute the Redstones' NRI voting interest in CBS from approximately 79 to 17 percent".

Neither CBS nor National Amusements would comment, and Verizon did not respond to multiple requests seeking comment. CBS is right to defend shareholder value but in doing so it could hurt investors in both companies. But getting them back together has proved challenging.

The talks, however preliminary, provide a backdrop for the CBS-Viacom merger discussions.

Moonves wants CBS COO Joseph Ianniello to be president and COO of the merged entity, and to succeed him as CEO when he retires.

The network suit is an effort to stop Shari Redstone from copying her father's 2016 gambit to reassert control over the Viacom board once questions arose about whether the billionaire's mental capabilities were waning.

The complaint states that the Redstones and their company National Amusements are planning to use their power as "controlling stockholder" to approve a merger of Viacom and CBS just days after it was unanimously rejected by members of a Special Committee of the corporation's Board of Directors.

The 94-year-old Redstone's mental health was at the center of a more than year-long fight over Viacom.

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