Judge rules in favor of CBS ahead of afternoon board meeting
CBS shares plunged 6.5 percent on Thursday after a Delaware judge denied the company's request for a restraining order against its parent company, National Amusement.s
CBS had wanted to loosen the control of the Redstone family's National Amusements, which had been pushing for CBS to merge with cable programmer Viacom, which it also controls.
The court loss sets up an awkward board meeting today between CBS CEO Leslie Moonves and Shari Redstone, president of National Amusements. CBS had said it planned to vote at the meeting for a company dividend that would dilute the voting power of National Amusements.
Viacom class B shares declined 1 percent.
In a statement, National Amusements said: "We are pleased by the court's decision to deny CBS and its special committee's unprecedented motion to try to deprive a shareholder of its fundamental voting rights. The court's ruling today represents a vindication of National Amusements' right to protect its interests.
"As we intend to demonstrate as the case proceeds, the actions of CBS and its special committee amount to a grievous breach of fiduciary duties and show no regard for the significant risk posed to CBS and its investors."
CBS, in a statement, offered some confidence based on certain parts of the judge's ruling, which said the company could have a case that National Amusements has breached its fiduciary duty.
The CBS statement: "The judge today found that the allegations in our lawsuit 'are sufficient to state a colorable claim for breach of fiduciary duty against Ms. Redstone and NAI as CBS's controlling stockholder.' We could not agree more. While we are disappointed that the judge did not grant a TRO, the ruling clearly recognizes that we may bring further legal action to challenge any actions by NAI that we consider to be unlawful, and we will do so. We remain confident that we will prevail in the lawsuit previously filed by CBS and the members of its Special Committee.
"As previously announced, the CBS Board will hold a meeting at 5PM today to consider declaring a dividend of shares of Class A common stock to all of the Company's Class A and Class B stockholders, as is permitted under CBS' charter. This dividend would more closely align economic and voting interests of CBS stockholders without diluting the economic interests of any stockholder."