CBS’s Stock Slumps Ahead Of Today’s Symbolic Board Vote

CBS’s Stock Slumps Ahead Of Today’s Symbolic Board Vote

Rallying this week as the company sought to assert its independence over its controlling shareholder, CBS’ stock tumbled back to earth today after a Delaware judge denied the company’s legal moves and the board is set to vote on a dilution measure that now is largely symbolic.

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CBS Aim To Halt Redstone Interference Denied By Court Ahead Of Board Meeting

On Monday network and its independent board members had sought a temporary restraining order to prevent Shari Redstone and National Amusement from interfering with a board ballot that would significantly water down her voting control over CBS. The ultimate aim of that move is to halt any potential Redstone desired merger with Viacom. Though essentially a gesture at best, that vote to exchange non-voting shares in CBS for a class of stock with voting rights will still happen, the Les Moonves run media corporation insisted this morning after Chancellor Andrew Bouchard’s order knocking down their TRO motion.

Redstone family holding company NAI controls nearly 80% of CBS’s voting stock, appears to have neutralized the dilution threat with a last-minute bylaw change requiring 90% of the board members to approve such a measure. That’s not very likely, since Redstone is a member of the board as are Redstone family lawyers Robert Klieger and David Andelman, who also serves as a director of National Amusements. No word yet if Board Vice-Chair Shari Redstone will be attending the meeting in NYC at 5 PM today.

However, though disputed by NAI, CBS asserts the bylaw change won’t take immediate effect, citing a Securities and Exchange Commission rule that imposes a 20-day delay. Either way, the end result looks to be a corporate purgatory of sorts with more legal dust-ups over the coming weeks and possibly months.

Investor enthusiasm spiked Monday — at one point during the day, shares were trading up 6% to $55.31 — on news that CBS had gone to court seeking protection from Redstone, whom the network claimed might replace board members or take other actions to force a merger with corporate sibling Viacom.

After today’s ruling, CBS stock dropped to $50.23 before recovering slightly to close at $51.61. That’s down 4% from the prior day’s closing price.

National Amusements has said repeatedly that it has no intention of strong-arming a deal that is not supported by both companies, and that CBS is really attempting to shrug off its controlling shareholder.

Viacom’s stock, meanwhile, tumbled on the news of CBS’s lawsuit and has yet to recover — suggesting some market concern that a merger might not happen. The stock closed at $28.16, off less than 1% for the day.