Two Moguls Vie for Power at Riven CBS

They were once allies, if not friends.

Entertainment mogul Shari E. Redstone and CBS chief executive Leslie Moonves, whose careers have been entwined for nearly 20 years, appeared to be getting along famously as recently as February, when they sat in the CBS box at Super Bowl LII in Minneapolis, both rooting for the New England Patriots.

Now, the two media heavyweights are in the early rounds of a bout over the fate of two of the world’s most prominent media and entertainment companies, CBS and Viacom. They find themselves at an impasse because of Redstone’s desire to merge the two companies, which are corporate siblings. Moonves, for his part, is firmly against the proposed merger.

At stake is Moonves’ storied career at CBS, which he took from last place to the most-watched television network, with hits like “The Big Bang Theory,” “Survivor” and “Young Sheldon.”

On Thursday, two developments were in the dispute. First, a judge ruled against an effort by CBS to block Redstone from having what is perceived as outsize influence over its board, which had scheduled a meeting to vote on reducing the influence of the Redstone family on CBS. Then, at a meeting later that day, the board voted 11-3 to dilute Redstone’s voting stake to roughly 20 percent from nearly 80 percent.

By evening, both sides had proclaimed victory, and the only sure thing was that they were all headed back to court.

A former criminal defense lawyer, the Massachusetts-born Redstone, 64, joined National Amusements, the flagship company in the empire founded in 1993 by her father, 94-year-old Sumner Redstone. She proved her corporate mettle in pulling out a victory in an earlier boardroom fight against another formidable rival, Philippe Dauman, the former Viacom chief executive. Shari Redstone ousted Dauman and replaced him with an executive more to her liking, Robert Bakish, in 2016.

Redstone’s main opponent, Moonves, 68, is a native of Long Island who began in show business as a bit-part television actor before recasting himself as a go-to producer and, later, as the smoothly confident network executive.

She is fighting for control of her father’s empire. He is fighting to retain power over the portion of it that he controls. Redstone may have the power to reach her goal, however, given her role as the head of the family business, which has a nearly 80 percent voting stake in CBS and Viacom, both of which are public companies.

The CBS board meeting began at 5 p.m. on the 35th floor of the CBS Building, known as Black Rock, in midtown Manhattan. According to a person familiar with the gathering, who was not authorized to discuss it publicly, a few of the 14 participants dialed in by phone. Redstone and Moonves were both present. The mood was tense.

The day before the meeting, Redstone had changed the board’s bylaws to require a 90 percent supermajority for any motion to carry. With the 3 people voting against the attempt to lessen Redstone’s share, CBS had only 78 percent of the vote.

In a statement issued afterward, National Amusements said it “has no intention of forcing a merger that is not supported by both CBS and Viacom. Today’s board vote, while couched as an effort to prevent such a transaction, was pure pretext. CBS management and the special committee cannot wish away the reality that CBS has a controlling shareholder.”

CBS rejected that view, saying in a news release after the meeting, “The board of directors has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders’ interests and would unlock significant stockholder value.”

At the network’s spare-no-expense party after the event, held in grand rooms on four floors of the Plaza Hotel, Moonves sat on a couch in the company of his wife, the anchor and television host Julie Chen, as the talent stopped by to kiss the ring.

Despite such trappings, which go along with an annual pay package of $69.3 million, Moonves may not be able to run CBS in a manner that goes against the wishes of its major shareholder. Since 1999, Redstone has served as the president and director of her father’s company, and her role has lately expanded, now that Sumner Redstone is in poor health, under the watch of attendants in his $20 million mansion in Beverly Hills, California. Since February of last year, Shari Redstone has been the official head of National Amusements, having taken control from the patriarch who once boasted that he would never die.

If Redstone is able to realize her wish of combining CBS and Viacom, she will become even more of a major player in the entertainment business. The CBS Corp. includes not only the broadcaster nicknamed the Tiffany Network, but the Showtime cable network, book publisher Simon and Schuster and Westwood One Radio Network. Viacom is the corporation that owns MTV, Comedy Central, Country Music Television and Paramount Pictures, the studio behind the recent “Transformers” blockbusters and classics from last century like “The Godfather” and “Double Indemnity.”

Redstone and her father first spoke of reuniting CBS and Viacom in 2016. The plan seemed to depend on her winning over Moonves, whom she had originally hoped would run the combined entity. But he was not on board with the plan, believing it to help a struggling Viacom but not a prospering CBS. Moonves also sought freedom to run the combined companies as he chose.

The talks renewed in January, with specially appointed committees at CBS and Viacom evaluating the proposed combination. Publicly, Moonves and Redstone did not seem to be at odds at the start of the latest round of talks. Two weeks before attending the Super Bowl, they sat in the front row of the box used by New England Patriots owner Robert Kraft during the AFC Championship Game.

The special committees working on the merger reached a preliminary agreement last week, according to people with knowledge of the discussions. But Moonves resisted giving his counterpart at Viacom, Bakish, any management or board role at the combined company. Soon after that, the feud was out in the open.

The recent split seems to have come as a surprise to Redstone. “It’s so hurtful, because Shari thought she had a good relationship with Les,” said an associate of Redstone. This person spoke on condition of anonymity because of the sensitive nature of the relationship between the two executives.