Shari Redstone suggested in a legal filing on Tuesday that she may be willing to relinquish control of the bulk of her father’s media empire.
National Amusements Inc., which was built by her ailing 95-year-old father Sumner Redstone, controls 80% of the voting stock of both Viacom and CBS and has for months been embroiled in a boardroom war between Shari Redstone and CBS chairman-CEO Leslie Moonves over her plan to merge the two companies into a single entity.
In her cross-complaint against CBS, Moonves, and 10 independent board members filed on Tuesday, Redstone suggests that the merger would allow her to sell the combined company at a better price. The suit states that Redstone told Moonves of this plan at a meeting on Jan. 16.
“Ms. Redstone discussed NAI’s long-term plans for CBS, focusing on a two-step process starting with a merger with Viacom that would strengthen both entities, and continuing thereafter with a sale or merger of the stronger combined entity, with NAI open to the possibility of relinquishing its voting control as part of that second transaction,” the suit states.
Redstone also told Moonves that “she was looking forward to being able to focus more on her family and her other business and non-profit interests,” according to the suit.
Both Redstone and Moonves declined comment.
CBS sued NAI two weeks ago, accusing Redstone of abusing her power over the company at the expense of public stockholders. Redstone’s suggestion that she might be willing to sell off her family’s stake could be a legal tactic, aimed at downplaying her ambitions and countering CBS’ depiction of her as a power-mad heiress.
In any case, Redstone’s expression of interest in a sale appears moot for now, as the merger is off the table. A CBS special committee resolved to oppose the deal, which it said was not in the best interests of shareholders. Redstone has said she would not force the deal against the board’s will. In Tuesday’s filing, she went so far as to suggest that she had come to the same conclusion earlier, and had informed the Viacom board that she no longer supported the merger.
Both sides continue to square off in a Delaware court over the CBS board’s move to strip Redstone of control over the company through a stock dilution. On May 17, the board voted 11-3 to reduce Redstone’s voting control from 80% to 20%. NAI argues that the move was unprecedented and invalid under Delaware law.
The legal process is expected to last at least a few months, during which time Moonves and Redstone will be in an uncomfortable standoff.
It is possible that Moonves could negotiate an exit from CBS which would resolve the dispute. Moonves’ contract provides for a substantial severance payout, which NAI pegs at $180 million. In the cross-complaint, NAI alleges that the pay package was adopted “without discussion or approval of the full Board, with the intended purpose of entrenching Mr. Moonves in his position as CEO,” and NAI reserves its rights as controlling stockholder to contest the payout.