In a dramatic turn in the long-running drama of CBS and controlling shareholder National Amusements, CBS and the Special Committee of its Board of Directors today filed a lawsuit in Delaware Court of Chancery.

The suit alleges breaches of fiduciary duty by National Amusements, the controlling entity of CBS and Viacom. Shari Redstone, who runs National Amusements, has been locked in a struggle with CBS chief Leslie Moonves over the companys merger talks with Viacom, which is also controlled by National Amusements.

The suit seeks to prevent National Amusements from interfering with a special meeting of the Board of Directors. At the meeting, the directors will consider declaring a dividend of shares of Class A common stock to all of the Companys Class A and Class B stockholders, as is permitted under CBSs charter. The dividend, if issued, would dilute National Amusements, Inc.s voting interest from approximately 79% to 17%. The dividend would not dilute the economic interests of any CBS stockholder.

“The Special Committee has taken this step because it believes it is in the best interests of all CBS stockholders, is necessary to protect stockholders interests and would unlock significant stockholder value,” the company said in a press release. “If consummated, the dividend would enable the Company to operate as an independent, non-controlled company and more fully evaluate strategic alternatives.”

CBS and Viacom were corporate siblings from 2000 through 2006. Since splitting, they have gone their separate ways, but Redstone has long sought to recombine the companies. The main sticking points have been management and fair value for CBS given the significant struggles at Viacom in recent years.

More to come …

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