Redstone, Viacom Board Accused Of 'Selling Out'

Media mogul Shari Redstone and other Viacom Inc. directors are being accused by a pension fund of selling out the entertainment company’s shareholders by ramming through an $11.7-billion merger with CBS Corp.. reports The LA Times.

Redstone, who also is CBS’ controlling shareholder, and her colleagues on Viacom’s board “expropriated potentially billions of dollars from Viacom’s minority stockholders” by agreeing to a deal that was unfavorable to investors, lawyers for the fund said in a complaint in Delaware Chancery Court that was unsealed Monday.

The merger was a long-sought reunion of CBS and Viacom — which were two parts of the same company until 2006 — engineered by Redstone over vehement opposition from now-former CBS executives.

Shari Redstone

The combination, which closed this month with unanimous approval from special board committees of CBS and Viacom, brought the U.S.’ most-watched TV network back together with the parent of Paramount Pictures and cable channels such as MTV and Nickelodeon. The combined company trades as ViacomCBS Inc.

In the complaint, the Employees’ Retirement System of the City of Kansas City, Missouri Trust seeks damages rather than a court order unwinding the merger.

The Redstone family decided to spin off CBS in 2006 as part of a bid to unlock greater shareholder value. That strategy didn’t work as expected, spurring sporadic efforts to re-combine the entertainment companies. Shari Redstone’s National Amusements Inc. is the controlling shareholder of both CBS and Viacom.

In the unsealed suit, the pension fund accuses Shari Redstone of packing Viacom’s board with her supporters so she could push through the merger without allowing minority shareholders to vote on it. Directors also negotiated an unfair exchange ratio in the stock-for-stock deal that failed to account for value created by the combination of the entertainment companies, the fund said.

“From the beginning of the negotiation process, the Viacom Transaction Committee — comprised of Shari Redstone’s loyalists — put her interests and objectives ahead of the interest of minority stockholders,” the fund’s lawyers said.