ViacomCBS Investors Sue Shari Redstone

ViacomCBS investors are accusing media mogul Shari Redstone of forcing through the merger of CBS and Viacom last year to protect her investment in Viacom, according to a lawsuit seeking class-action status.

The Wall Street Journal reports the 119-page lawsuit, which was filed jointly in Delaware Tuesday by the Bucks County Employees Retirement Fund and the International Union of Operating Engineers of Eastern Pennsylvania and Delaware, is a combined version of earlier complaints filed against ViacomCBS.

The suit said financial advisers, executives and board members at Viacom and CBS conducted “a months-long Kabuki-like negotiation” to ensure that Ms. Redstone would realize her goal to combine the companies on favorable terms to National Amusements, Inc., the holding company controlled by the Redstone family.

Shari Redstone

National Amusements declined to comment on the lawsuit. A spokesman for ViacomCBS said that the complaint is “without merit,” adding that the company intends to file a motion to dismiss the lawsuit.

A redacted version of the lawsuit lays out a version of events that casts Ms. Redstone as a deal-making mastermind who appointed loyalists to the boards of both Viacom and CBS to advance her agenda to combine the two companies.

Viacom and CBS announced their merger last August after two earlier attempts, in late 2016 and 2018, the latter of which resulted in a protracted legal battle between National Amusements and CBS over the future of the company. When the third and ultimately successful merger attempt was announced in 2019, ViacomCBS executives said the combined company would be large enough to compete in a crowded marketplace dominated by large conglomerates and direct-to-consumer streaming companies.

The company’s stock price has plunged since the deal was announced, and is down more than 60% so far this year. ViacomCBS’s major rivals, such as Walt Disney Co. and Discovery Inc., have seen their share prices fall by more than 30% since the start of the year amid the coronavirus pandemic.

The lawsuit said Viacom’s poor performance during the runup to the merger spurred Ms. Redstone to push for a deal. After an attempt to combine Viacom and CBS fell through, Ms. Redstone in 2017 wrote to Rob Klieger, her attorney and a former CBS corporate director, that Viacom was “tanking,” according to the suit. The lawsuit also said Ms. Redstone prevented CBS from engaging in merger discussions that didn’t also include a deal for Viacom.

“The sole reason for the merger was to protect Shari Redstone’s floundering Viacom investment,” the lawsuit said. “Now CBS is saddled with an entity that has long underperformed it in the marketplace.”