CBS loses initial battle with shareholder
The US media company CBS has lost an initial court battle amid a dispute with one of its biggest shareholders over control of the company.
A Delaware judge on Thursday lifted a temporary restraining order against National Amusements, which is owned by the Redstone family.
The ruling is expected to prevent CBS from taking steps to reduce National Amusement's voting power.
CBS said it was disappointed but said it would continue its fight.
It said: "The ruling clearly recognises that we may bring further legal action to challenge any actions by [National Amusements] that we consider to be unlawful, and we will do so."
Tensions between the two sides were triggered by Shari Redstone's efforts to merge CBS with Viacom, another National Amusements company.
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This week, a CBS committee decided the proposal was not in the firm's interest. The company also announced plans to consider reducing National Amusement's voting power by issuing a special dividend at a meeting on Thursday.
It would dilute her voting power from 80% to 17%.
The firm argued that Ms Redstone's interference in the merger process and other actions posed "significant threat of irreparable and irreversible harm" to CBS.
CBS had sought a temporary restraining order against National Amusements ahead of the meeting, arguing that Ms Redstone would block the plan to reduce her voting power by changing the board or its bylaws.
However, Delaware Chancery Court Chancellor Andre Bouchard said "a truly extraordinary set of circumstances would be necessary to grant such a request".
"I am not convinced that the harm plaintiffs fear would be irreparable," he wrote.
"To the contrary, the court has extensive power to provide redress if Ms Redstone takes action(s) inconsistent with the fiduciary obligations owed by a controlling stockholder."
Despite the ruling, CBS said it would hold the meeting as planned.
National Amusements, which operates movie theatres in the US, UK and Latin America, controls about 80% of the voting power at both CBS and Viacom through a dual share class structure. The firm's ownership stake is lower.
After CBS filed the lawsuit, National Amusements moved to amend the board's bylaws, requiring a supermajority for certain measures.
National Amusements said the judge's decision was "a vindication of National Amusements' right to protect its interests."
It said: "We are pleased by the court's decision to deny CBS and its special committee's unprecedented motion to try to deprive a shareholder of its fundamental voting rights."
Viacom and CBS were previously part of the same company, but Sumner Redstone, Shari's father, separated the two firms in 2005.
CBS subsidiaries include its flagship television network, television studios and the Simon & Schuster publishing firm.
Viacom includes Paramount, as well as media brands such as Nickelodeon, Comedy Central and MTV.
CBS shares plummeted after the decision,