No therapists needed for Viacom-CBS. But how about regulators and minority stakeholders?
The worst-kept secret in the media business is official: Viacom and CBS Corp. are merging again with Shari Redstone becoming chair of the combined entity. But will shareholder litigation get in the way?
Upon the announcement, Mario Gabelli, the biggest independent holder of voting stock in the two companies, wasn't happy. HeThe history of CBS/Viacom is, in many ways, a tale of corporate and media law. Viacom exists, in the first place, because the FCC came out with rules in 1970 that forbid television networks from holding interest in companies that produced or syndicated content. Those fin-syn rules caused CBS to spin-off Viacom even if Sumner Redstone eventually regained control in a proxy fight. The relaxation of fin-syn rules in the 1980s, and eventual repeal in the early 1990s, eventually resulted in a Viacom/CBS reunion in 1999.
This time, thanks to the rise of digital giants like Netflix and Amazon and the perception that Viacom and CBS are stewards of a struggling legacy operation in the entertainment business, analysts don't expect regulators to put up a fight this time.The Redstones control CBS and Viacom through National Amusements, Inc., and it's a dual-class voting structure that has largely allowed the family ultimate power even if public stockholders hold 90% of CBS’s equity.
If he files suit, it's likely coming in Delaware Chancery Court and may include some of the back story behind the merger including the Redstones'
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