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CBS Board Tries to Move Past Moonves Crisis With New Directors

Category: Business,Finance

The crisis at the CBS Corporation over the last few months has featured enough drama to make the prime-time shows that will air on its network’s new season in two weeks seem bloodless: multiple allegations of sexual assault against its chief executive published in a prominent magazine, a nasty legal showdown with its controlling shareholder and claims by that shareholder that she was physically bullied by a board member.

Fighting scandal on several fronts, the CBS board on Sunday worked to resolve all the disputes in one deal. It negotiated the departure of its chief executive, Leslie Moonves; appointed the chief operating officer, Joseph Ianniello, to take his place on an interim basis; and installed six new directors it hopes can lead the company out of trouble.

What the revamped 13-member board has planned for CBS depends on how it views the importance of consolidations, as Silicon Valley continues to steal ad dollars and eyeballs away from traditional TV players. It will also depend on what kind of relationship it has with its controlling shareholder, Shari Redstone, who has been agitating for a merger with Viacom, the once-lofty cable company behind MTV and Nickelodeon that she also controls.

Ms. Redstone and Richard D. Parsons, the former Time Warner chief executive, picked the new board members, according to three people familiar with the process who spoke on the condition of anonymity to discuss internal matters. Mr. Parsons, an ally of Ms. Redstone, had been nominated to become a director earlier this year, and he officially joined on Sunday along with five others. With the exception of Mr. Parsons, the new directors have no significant ties to Ms. Redstone, these people said.

After the nominees were interviewed by two independent directors, Bruce S. Gordon and Martha L. Minow, the larger board endorsed the new appointments, the people said. Mr. Gordon was an instrumental figure in negotiating the larger settlement that included Mr. Moonves’s removal following allegations of sexual harassment against him, two of the people said. A former head of the N.A.A.C.P., he worked through Saturday night and into Sunday to complete the deal, they said.

“This agreement maintains an independent board that is charged with determining the best course for the future of CBS on behalf of all shareholders,” Mr. Gordon said in a statement on Sunday. The deal was announced just hours after The New Yorker published an article in which six women accused Mr. Moonves of sexual misconduct. That followed an article by the magazine in July in which six different women accused him of misconduct.

Ms. Redstone said in the statement that she was “delighted to welcome our new directors, who bring valuable and diverse expertise and a strong commitment to corporate governance.”

The directors include two executives who have specialized in merger and acquisitions and a corporate consultant. Candace K. Beinecke, a partner at the law firm of Hughes Hubbard & Reed, has handled corporate governance issues and helped broker mergers for corporate clients. Barbara M. Byrne has deep ties to the banking industry as a former vice chairman of Barclays and a former employee of Lehman Brothers. She is also a member of the Council on Foreign Relations. Susan Schuman, the chief executive of the corporate consultancy group SYPartners, has done work for Blackstone, Facebook, Viacom and sits on the advisory council for the MIT Media Lab.

In addition to Mr. Parsons, the board added two other men. Brian Goldner is the chief executive of Hasbro, where he expanded the company’s media strategy by making deals with film studios such as Paramount Pictures, owned by Viacom, and Universal, to create movies based on Hasbro properties. Strauss Zelnick, the head of the video game publisher Take-Two Interactive Software, has deep ties to the media industry. He had led the music publisher BMG Entertainment and had served as president of 20th Century Fox.

The departure of Mr. Moonves leaves the board without a chairman. That appointment will be made fairly soon, the people familiar with the process said. Ms. Redstone, who is vice chairwoman, is a likely candidate.

Seven directors remained on the board, including two who are affiliated with National Amusements, the Redstone family company that controls CBS and Viacom. They are Ms. Redstone and Robert N. Klieger, who has worked as a lawyer for National Amusements. Mr. Gordon, Ms. Minow and three other CBS directors also remain on the board.

The newly configured group will have to move beyond past skirmishes. In May, CBS, along with Mr. Gordon and four other directors, sued Ms. Redstone, claiming she had breached her fiduciary duty to the company’s shareholders by pushing for a merger with Viacom.

The lawsuit exposed deep factions within the board, with one group apparently loyal to Ms. Redstone, another to Mr. Moonves and others debating which direction the company should take.

The Sunday settlement was intended to resolve not only Mr. Moonves’s exit but also the showdown over the potential merger. The lawsuit was withdrawn, and Ms. Redstone agreed to refrain from pushing for a deal with Viacom for two years.

The agreement, she said, “will benefit all shareholders, allowing us to focus on the business of running CBS — and transforming it for the future.”

But the terms also allow CBS to independently pursue a deal with Viacom if it determines a merger would benefit shareholders. At least eight of the independent directors not affiliated with Ms. Redstone’s family company would have to agree on such a deal.

If they do, that would align with Ms. Redstone’s grand scheme, which is to merge CBS and Viacom and sell the combined company. That strategy was revealed in a May 2018 complaint she filed against CBS.

Ms. Redstone has been working with her father, Sumner Redstone, 95, who has been in ill health and no longer speaks, as she aids him on voting issues with CBS and Viacom. He owns 80 percent of the vote in National Amusements, which in turn owns 80 percent of the voting rights in CBS and also Viacom.

If Mr. Redstone dies, or is declared incapacitated, his shares would be transferred to a seven-member trust that includes Ms. Redstone, a family lawyer and his grandchildren.

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