EXCLUSIVE: Talks remain fluid on ending the legal battle between CBS and top shareholder National Amusements as well as the decades-long reign of Les Moonves at the media company, but already a new corporate structure is coming into focus.
As Moonves and his advisors including lawyer Daniel Petrocelli field exit offers from CBS’ independent board members understood to be in the $100 million-$125 million range, a united front has developed between the likes of the board’s Bruce Gordon and the Redstone family-dominated NAI to reach what is being called an “all-encompassing settlement.”
That deal, which Deadline first revealed exclusively yesterday was being discussed, would include a “refreshment” of the CBS board with exits and additions of those loyal to both Team Redstone and Team Moonves, we’ve learned.
Unlike the “Red Wedding” house-clearing that occurred at Viacom in 2016 when Sumner Redstone, at least in name, ordered the ouster of soon-to-be pink-slipped CEO Philippe Dauman and others from the board, the new CBS ruling body would see independent directors like ex-NAACP CEO Gordon remain, for instance. Also as part of the plan being discussed, CBS’ chief operating officer and presumed Moonves successor Joseph Ianniello, though no favorite of Shari Redstone’s, would take over as interim CEO. An outside search for a permanent CEO is planned, but sources say Ianniello’s name will be well in the mix for the job too he is well regarded on Wall Street and analysts will be looking for stability.
This is not dissimilar to what happened at Viacom, where five independent directors were installed and Chief Operating Officer Tom Dooley was installed as interim CEO, following Dauman’s departure.
In a move to placate what has been viewed by several CBS execs and members of Team Les as a “stack the deck” power play by Shari Redstone, there is also discussion that the current vice chair and daughter of the 95-year old chairman emeritus would not transition into the top seat surrounded by nothing by subservient courtiers.
“They all want the ability to do what is best for the shareholders,” one well-place source said of the board’s potential CBS blueprint, noting that there is no cast-in-stone timeline for an agreement that remains a few steps from being finalized. “There is something for everyone in this deal,” the insider added optimistically.
With the whispered possibility that a deal may be reached by close of market Friday, others also tell Deadline that the “board has not flipped.”
“This is not about one person, it is about CBS and moving forward,” said another insider, referencing both Moonves and his onetime ally Shari Redstone.
Moving forward now also seems to include not moving forward with a merger of CBS and Viacom, which had been on the table and partially led to the legal dispute that began this spring. NAI made clear from the beginning of the special committee process that it would only support a transaction that was supported by both CBS and Viacom. In its legal filings, NAI also disclosed that, in advance of CBS’ complaint over a merger, it had already determined it could no longer support the transaction. In meetings around finding a settlement for the issues facing CBS and its controlling shareholder, all sides now see a merger as a non-starter.
In that spirit, corner office sources stress that a consensus has been established in recent weeks that the sexual harassment and sexual assault accusations against Moonves and the corporate control lawsuits that kicked off May 14 are not sustainable situations for even the short term. The fact that the trial in the CBS-NAI legal battle — over breach of fiduciary duty, the capacity of the elder Redstone and stock slicing — is set to start October 3 only further the parties’ desite to find common cause and avoid an acrid public fight.
Of course, as much as those involved want a deal ASAP, there are still at least two major roadblocks: money for Moonves and the byzantine Redstone family trust.
Sumner Redstone’s trust is designed to limit what heirs can do with his media assets after the mogul’s death. One red-flagged provision would prohibit trustees from entering into any merger that would leave National Amusements’ shareholders with less than 30% voting control of the resulting business. That, CBS insiders note, would limit the media company’s options in exploring possible business combinations.
Having said that, trusts including this one can be changed, a point Shari Redstone’s side has been making in calling this a red-herring issue after details of the trust recently emerged in Delaware court documents.
NAI’s counsel made clear in court that the relevant NAI trust provision to which CBS refers doesn’t preclude anything, saying NAI trustees have the power to amend the relevant provision after Sumner’s lifetime. “If they think that that provision would preclude the trustees after Mr. Redstone’s lifetime from doing something, they’re wrong about that, because the trustees can amend it,” they said.
Moonves, who has long been among the best-compensated executives in the entertainment industry, has a predictably lucrative severance package, with tens of millions at stake.
A longtime favorite on Wall Street, Moonves would be entitled to more than $180 million if he were terminated without cause. That figure factors in salary, bonus and the vesting of $65 million in stock, according to SEC filings. Moonves would collect $115 million in salary and bonus if he were terminated “with good reason,” the documents show.
Now, as negotiations continue on Moonves’ corporate twilight, the devil is fully in the details.
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