LESLIE’S LAST STAND

Inside the Moonves mutiny: The plan to wrest control of CBS from Shari Redstone, keep shareholders happy and save his job

On the evening of May 17, the CBS Corp. chairman-ceo, Shari Redstone and the rest of the CBS board gathered in a conference room at the company’s New York Black Rock headquarters for a monumental vote that could significantly reduce Redstone’s voting power in CBS and Viacom parent National Amusements Inc. Moonves addressed the issues on the table in unusually personal terms, according to multiple people with direct knowledge of the meeting. At first, he explained his view that there was no compelling business rationale for reuniting CBS with Viacom — as Redstone was advocating — arguing that it was against the interests of all CBS shareholders. He explained that he felt he could not manage the company under such circumstances. He noted that his opinion was shared unanimously by CBS’ financial advisers, Crestview Partners, Moelis & Co. and Lazard, and the special board committee assembled in February to consider the proposed Viacom deal.

Then, Moonves added to the thick tension in the room by acknowledging his personal distress — “hurt” was the word he used, according to two sources — at reading stories as early as last year that he could be fired in a Cbs-viacom merger. The CBS camp believes that an August 2017 report by BTIG Research’s widely read media analyst, Rich Greenfield, stating Moonves should be fired if he doesn’t agree to a Cbs-viacom merger was informed by sources connected to the NAI and Redstone world (“We are 100% independent — we are nobody’s lap dog,” says Greenfield via email).

Redstone also spoke briefly at the session, according to sources. She reiterated the assertions that NAI has made from the beginning of the legal brawl: It had no intention of forcing a merger over the opposition of either company, nor did it ever intend to oust Moonves or replace CBS board members.

During the meeting, Redstone addressed a recent focus on removing longtime CBS director Charles K. Gifford (who was in the room), noting it was because of instances of his allegedly bullying her, not because she disagreed with his opinion on the merger consideration. Redstone had pushed for the replacement of Gifford, 75, who is chairman emeritus of Bank of America. That was one factor that set CBS off on its legal strategy against National Amusements. CBS and some of its directors are incensed that Gifford’s behavior has been questioned in the context of the corporate battle.

CBS had filed suit against NAI on May 14, accusing its controlling shareholder of breach of fiduciary duty by pursuing an agenda that went against the interests of all CBS shareholders. NAI, which also controls Viacom, has vehemently denied CBS’ allegations and vowed to stop the effort to strip NAI of its voting control in the company.

In the minds of many in the media industry, the legal blowup has irreparably damaged the relationship between Redstone and Moonves. It is widely believed that if CBS loses its fight to slash Redstone’s voting power from 80% to 20%, Moonves will leave the company. Business insiders find it hard to fathom CBS without Moonves, who has been a force there for more than 20 years. Both Moonves and Redstone declined to be interviewed for this story.

The back-and-forth between the two threatens to get personal. “[They] each have their business cases to make, but it has been completely tied into their personalities, their identities as leaders, as businesspeople,” says Syd Finkelstein, a professor of management at Dartmouth’s Tuck School of Business who studies leadership and corporate governance. “Once that happens, it becomes an emotional battle, not just a strategic one.”

Moonves has for decades presented the most confident of facades, no matter the challenges surrounding him, including that CBS is up against significantly larger competitors amid a growing spate of megamergers: Comcast controls Nbcuniversal; Discovery snapped up Scripps Networks; Disney is set to buy the bulk of 21st Century Fox if it isn’t outmaneuvered by Comcast; and AT&T is poised to acquire Time Warner.

The TV industry faces a host of wrenching disruptions. There’s new competition from Apple, Netflix and Ama-