The crisis at CBS Corp. over the past few months has featured enough drama to make the prime-time shows that will air on its network’s new season in two weeks seem bloodless. Multiple allegations of sexual assault against its chief executive published in a prominent magazine, a nasty legal showdown with its controlling shareholder and claims by that shareholder that she was physically bullied by a board member.
Fighting scandal on several fronts, the CBS board has worked to resolve all the disputes in one deal. It negotiated the departure of its chief executive, Leslie Moonves; appointed the chief operating officer, Joseph Ianniello, to take his place on an interim basis; and installed six new directors it hopes can lead the company out of trouble.
What the revamped 13-member board has planned for CBS depends on how it views the importance of consolidations, as Silicon Valley continues to steal ad dollars and eyeballs away from traditional TV players. It will also depend on what kind of relationship it has with its controlling shareholder, Shari Redstone, who has been agitating for a merger with Viacom, the once-lofty cable company behind MTV and Nickelodeon that she also controls.
Redstone and former Time Warner CEO Richard Parsons picked the new board members, according to three people familiar with the process. Parsons, an ally of Redstone, had been nominated to become a director earlier this year, and he officially joined on September 9 along with five others. With the exception of Parsons, the new directors have no significant ties to Redstone.
The Sunday settlement was intended to resolve not only Moonves’ exit but also the showdown over the potential merger. The lawsuit was withdrawn, and Redstone agreed to refrain from pushing for a deal with Viacom for two years.
The agreement, Redstone said, “will benefit all shareholders, allowing us to focus on the business of running CBS — and transforming it for the future.”
But the terms also allow CBS to independently pursue a deal with Viacom if it determines a merger would benefit shareholders. At least eight of the independent directors not affiliated with Redstone’s family company would have to agree on such a deal.
If they do, that would align with Redstone’s grand scheme, which is to merge CBS and Viacom and sell the combined company. That strategy was revealed in a May 2018 complaint she filed against CBS.
Redstone has been working with her father, Sumner Redstone, 95, who has been in ill health and no longer speaks, as she aids him on voting issues with CBS and Viacom. He owns 80 per cent of the vote in National Amusements, which in turn owns 80 per cent of the voting rights in CBS and also Viacom.
If Redstone dies, or is declared incapacitated, his shares would be transferred to a seven-member trust that includes Shari, a family lawyer and his grandchildren.
— New York Times News Service