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Media

CBS Sues to Strip Redstone Family of Supervoting Power

This is an extraordinary lawsuit of interest to any company whose founder has supervoting shares—and that includes both Alphabet and Facebook. CBS has reportedly sued to dilute the majority voting stock held by its controlling shareholder, the Redstone family, to stop it from forcing a merger with the Redstone family’s other public media company, Viacom.

This is the latest in a long and twisting road between the two companies and the Redstones, much of which is so involved that it’s hard to keep up with. Suffice it to say that CBS CEO Les Moonves reportedly doesn’t appear to want to combine with Viacom, whose business is dependent on the declining cable channel world, whereas CBS is a broadcaster that currently is in a better position.

Whatever the reason, the idea that a public company would seek to strip a controlling shareholder of its supervoting rights appears to have ramifications for all companies with dual classes of shares. According to this story, CBS wants to issue a special stock dividend to dilute the voting power of the Redstone family to 17% from 79%. Mark Zuckerberg, whose control of Facebook has lately also been under attack, might want to pay attention—as should the Alphabet founders, and two other media moguls who use supervoting stock to retain control—Rupert Murdoch and Comcast CEO Brian Roberts.

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