CBS Says It Will Challenge Amendments to Bylaws

Changes would prevent diluting Redstone stake
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CBS said it plans to challenge amendments to its corporate bylaws made by the family of Sumner Redstone that prevent the CBS board from diluting the Redstones’ stake in the company.

The move is the latest in the war between CBS and Sumner Redstone’s daughter Shari Redstone over the future of CBS.

The Redstones control about 79% of CBS voting stock through their holding companies National Amusements and NAI Entertainment Holdings. They own 10.3% of common stock.

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National Amusements has asked CBS and Viacom, which it also controls, to consider combining to create a bigger media company. CBS has resisted merging with Viacom and several of the terms of a potential deal.

In an SEC filing, CBS said that on May 16, the Redstone companies delivered to CBS documents that said they had amended the CBS bylaws and that the changes take effect immediately.

The new bylaws would restrict the ability of the board to declare stock dividends and change the vote required to change the bylaws.

Natioal Amusements, in response to the CBS filing, said "NAI exercised its legal right to amend CBS’ bylaws and this change was effective immediately. We are confident the court will uphold NAI’s action.” 

CBS directors last week voted to issue a stock dividend that would dilute the Redstones control of the media company. That dividend was contingent on a positive ruling in a Delaware Court.

“The Company intends to challenge the Purported Bylaw Amendments,” CBS said in its filing. “The Company believes the Purported Bylaw Amendments are invalid under Delaware law and the Purported Bylaw Amendments cannot become effective under controlling federal law and SEC rules until 20 days after the Information Statement is distributed to stockholders even if they were valid,” CBS said in its filing.

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