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CBS Corporation

CASE CAPTION In re CBS Corporation Stockholder Class Action and Derivative Litigation
COURT Delaware Court of Chancery
CASE NUMBER Consolidated C.A. No. 2020-0111-JRS
JUDGE Honorable Joseph R. Slights
PLAINTIFF Bucks County Employees Retirement Fund
DEFENDANTS ViacomCBS, Inc., Joseph Ianniello, Candace K. Beinecke, Barbara M. Byrne, Gary L. Countryman, Brian Goldner, Linda M. Griego, Martha L. Minow, Susan Schuman, Frederick O. Terrell, Strauss Zelnick, Thomas J. May, Judith A. McHale, Ronald Nelson, Nicole Seligman, National Amusements, Inc., NAI Entertainment Holdings LLC, Shari E. Redstone, Robert N. Klieger and the Sumner M. Redstone National Amusements Trust

In In re CBS Corporation Stockholder Class Action and Derivative Litigation, Consolidated C.A. No. 2020-0111-JRS, Kessler Topaz alleged that the merger of CBS and Viacom was unfair to CBS and its public shareholders because CBS was forced to overpay for Viacom’s declining business. Kessler Topaz alleged that the merger was the culmination of a years-long effort by Shari Redstone, who controlled both CBS and Viacom, to combine the two companies in order to save her family’s investment in the floundering Viacom as it suffered from industry headwinds due to consumers shifting away from cable television subscriptions. Ms. Redstone twice previously attempted to merge CBS and Viacom in the years leading up to the merger, but failed due to opposition by the board. Then, in 2019 after replacing a majority of directors on the CBS board, her third attempt to merge the two companies succeeded. 

After the merger was announced in August 2019, Kessler Topaz quickly initiated a books and records investigation pursuant to Delaware law in order to investigate potential merger-related claims against CBS’s board of directors. After negotiations over the scope of the investigation broke down, Kessler Topaz pursued its clients’ inspection rights through a successful books and records trial. After trial, the Delaware Court of Chancery ordered CBS to turn over significant additional documents, including internal communications. Kessler Topaz analyzed the documents received and used them to craft a 118- page complaint against CBS’s board of directors in April 2020.

After successfully defeating the CBS board of directors’ and Ms. Redstone’s motions to dismiss in January 2021, the case moved into discovery and the parties prepared for trial. Kessler Topaz developed significant facts that the merger was concocted purely by Ms. Redstone and her advisors in order for CBS to bail out her failing interest in Viacom, a company comprised of a collection of cable-TV networks that was described by many as a “melting ice cube” due to the prevalence of “cord cutting.” Ms. Redstone’s hand-picked directors acquiesced to her plans, while hold-over directors from the previous board’s opposition to the merger were sidelined throughout the process and given no substantive role. And because the market widely viewed Viacom as a weaker company without significant upside prospects, CBS’s stock price plummeted in the wake of the merger announcement, costing shareholders hundreds of millions of dollars in value.

Trial in the case was set to begin in June 2023. On April 18, 2023, after extensive mediation, and after completing virtually all of fact and expert discovery, the parties reached an agreement to settle the action in exchange for a $167.5 million cash payment by defendants and their insurance policies to CBS.  The settlement was structured to reimburse CBS for its overpayment for Viacom.  Unlike in a class action, the settlement fund will not be distributed to CBS’s minority stockholders, because the alleged harm was to CBS, the corporation, for overpaying for Viacom.

On September 6, 2023, Vice Chancellor Sam Glasscock of the Delaware Court of Chancery approved what he called an “extraordinary” $167.5 million settlement. 

Read the Stipulation and Agreement of Settlement, Compromise, and Release Here

Read Notice of Pendency and Proposed Settlement of Stockholder Derivative and Class Action, Settlement Hearing, and Right to Appear Here