CBS Halts Tomorrow’s Annual Shareholder Meeting Following Board Vote

CBS Halts Tomorrow’s Annual Shareholder Meeting Following Board Vote

After a week of dramatic legal skirmishes with Shari Redstone and National Amusements in its battle to stop a proposed merger with Viacom, CBS today decided to hit the pause button on Friday’s long scheduled annual shareholder’s meeting.

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“In light of the recent actions by NAI and the pending litigation in the Delaware Chancery Court, the Board of Directors determined to postpone its 2018 annual meeting of stockholders that was previously scheduled to take place tomorrow,” the Les Moonves run company said at the conclusion of today’s board meeting in NYC. “The Board will determine shortly a new record date for the meeting and will publicly announce the new date, time and location. The postponement will provide all constituents with additional time to consider all pertinent matters before the annual meeting.”

After the high-stakes court tactics, CBS directors also held a symbolic vote seeking to diminish the influence of the network’s controlling shareholder – that Redstone run NAI. As Deadline reported earlier, Shari Redstone was in attendance for the tense gathering

The board voted to approve a special dividend that would exchange one share of non-voting CBS stock for a share with voting power, a move intended to dilute Redstone’s control over the network through the family’s National Amusements holding company.

Still, the stock-swap vote is unlikely to take effect.

Ahead of a court hearing yesterday on a CBS motion for a temporary restraining order, National Amusements changed the bylaws of the Les Moonves-run company to require the support of a supermajority of directors for such measures. “The Company believes that the written consents delivered by NAI purporting to amend the Company’s bylaws are neither valid nor effective,” asserted CBS, insisting the change doesn’t kick in for another 19 days.

NAI disagrees.

“As National Amusements has repeatedly stated, it has no intention of forcing a merger that is not supported by both CBS and Viacom,” the holding company told Deadline. “Today’s board vote, while couched as an effort to prevent such a transaction, was pure pretext,” they bluntly said. “CBS management and the special committee cannot wish away the reality that CBS has a controlling shareholder. NAI yesterday exercised its legal right to amend the company’s bylaws to require a supermajority vote on certain board actions with respect to dividends, effective immediately. In light of the Board’s action today, that action was plainly necessary, and it is valid.”

The dividend, if ever issued, would dilute NAI’s voting interest from approximately 79% to approximately 20%. The dividend would not dilute the economic interests of any CBS stockholder.

“The payment of the dividend is conditioned on a final determination by the Delaware courts, including a final decision on or the exhaustion of time for any appeals, that the dividend is permissible,” CBS noted on Thursday. “The record date for the dividend will be 10 days following such final determination by the Delaware courts or on the next business day after the end of such 10-day period. The payment date is expected to occur five business days after the record date or as soon as practicable thereafter.”

As they arrived at CBS headquarters, directors kept a low profile. Two were spotted walking the short distance from their chauffeur-driven SUVs to the building, with security guards by their sides. They ignored the presence on the sidewalk of a CNBC crew and a reporter from Deadline.

A security guard, who the night before had worked CBS’s Upfront after party at The Plaza Hotel, moved reporters a safe distance away from the entrance and onto public sidewalk.

The meeting culminated a week of legal drama, in which CBS made an extraordinary attempt to obtain a restraining order to prevent Redstone from interfering with the vote. The network said it was fearful of her meddling in CBS’s deliberations over a possible merger with corporate sibling Viacom, a charge that Redstone, through National Amusements, has emphatically denied.

Bernstein analyst Todd Juenger observed that CBS’s legal battle may have given the network what it wanted, after all: a public assurance from National Amusements has no intention of forcing a merger, whether by removing and replacing board members or through other means.

“It would be impossible, we think, for NAI to no go and do exactly what they told the court they wouldn’t do, Especially given the intense level of scrutiny that NAI will now be under.

The events provide an unusually charged backdrop for the annual shareholders meeting was supposed to take place at 10 AM Eastern tomorrow the Museum of Modern Art in New York City. The meeting typically presents an opportunity for CBS’s showman chief executive, Leslie Moonves, to take a victory lap, touting CBS’s programming and ratings accomplishments and financial performance.

It’s anybody’s guess what might happen this year.