Industry veteran Strauss Zelnick is among the new board members coming to CBS Corp. as a massive shakeup of the company looms later today with the departure of longtime chairman-CEO Leslie Moonves amid a cascade of sexual assault allegations.
Formal announcement of Moonves’ ouster is expected within a few hours. Zelnick, founder of ZMC and a former Fox and Columbia Pictures executive, is one of six new board members who will be installed on the 14-member panel in keeping with CBS controlling shareholder National Amusements Inc.’s desire to freshen CBS’ board of directors. Richard Parsons, former chairman of Time Warner, was already in line to join CBS’ board.
Moonves’ top lieutenant, CBS chief operating officer Joe Ianniello, will be named interim CEO while the company mounts a search for Moonves’ permanent successor.
CBS filed suit against its controlling shareholder in May as Moonves and NAI president Shari Redstone clashed over control and the long-term vision for the company. The settlement news to come will include the end of the litigation and the exit agreement with Moonves. Moonves’ severance package will not be determined until the close of CBS’ internal investigation into allegations of sexual misconduct first raised in a July 27 expose published by Ronan Farrow in the New Yorker.
The settlement contains provisions designed to give CBS some autonomy from NAI and to allow the company to put itself on the block for sale. A source close to the situation said the settlement spells out a process for the board to evaluate M&A overtures, although that was disputed by another source with knowledge of the agreement. One source of friction between Moonves and a majority of CBS board members has been allegations that Redstone rebuffed acquisition overtures for CBS in favor of her preference of merging CBS and Viacom, which NAI also controls.
The agreement also includes a commitment from NAI to refrain from pushing a Viacom merger for at least two years — that’s an effort to provide a runway for CBS to be sold as a standalone entity. The existing CBS board and Moonves balked at a reunion with Viacom because they believe CBS is more valuable on its own. NAI has repeatedly stated that it would not force a CBS-Viacom merger unless it was supported by the boards of both companies.
The agreement further spells out a board-review process for the CEO search that is designed to ensure Ianniello gets a fair shot at the permanent job.
The 11 independent board members of CBS took an aggressive stance against what they viewed as NAI’s interference with the governance process when it voted in May to issue a special dividend that would have the effect of diluting the size of NAI’s stake in CBS’ voting shares, taking it down from 80% to about 20%. That move sent both sides to court in Delaware to seek a legal ruling on the dividend.
As part of the settlement, CBS will rescind that special dividend. NAI will revise amendments to CBS’ bylaws that it made hastily in an effort to invalidate the board’s vote.
More to come