A Delaware judge refused to issue a restraining order against Shari Redstone and her family Thursday, allowing them to continue to keep tight control over CBS Corp. _ and possibly begin to replace members of the board.
CBS stock immediately plummeted more than 6 percent.
The judge's ruling appears to lessen the prospect of a contentious CBS board meeting later Thursday afternoon. CBS board members had been planning to consider voting on an extraordinary maneuver that would have stripped the company's controlling shareholders _ Redstone and her family _ of their voting clout.
However, it is doubtful that CBS' independent board members, who are recommending the move, will succeed in that effort. Redstone _ through the family's investment vehicle National Amusements Inc. _ on Wednesday made changes to CBS' bylaws that require votes on such matters to receive at least 90 percent approval of the board.
That means that Shari Redstone can effectively block any change that she does not like because she has at least two board allies, both of whom have served as Redstone family attorneys. The bylaw change came just an hour before the hearing in Delaware to consider CBS' request for a temporary restraining order against the Redstones _ a move that seemed to startle even the judge overseeing the case.
"I've never seen anything quite like what transpired here," Chancellor Andre G. Bouchard of the Delaware Chancery Court said at the conclusion of Wednesday's hearing.
The legal wrangling could become a protracted affair if CBS tries to continue to fight the Redstones. CBS' independent shareholders were recommending issuing a dividend that would give votes to Class B shareholders, who currently lack a vote.
Under that scenario, the Redstones would have just 17 percent of the vote, compared to the nearly 80 percent that they now enjoy. The Redstones own about 10 percent of CBS.
The legal wrangling comes after months of strained relations among Redstone; Leslie Moonves, the chairman and chief executive of CBS; and other members of CBS' board. Redstone has been trying to push through a merger with Viacom Inc., the other company that her family controls.
CBS' independent directors on Sunday concluded that merger was not in the best interest of its shareholders.
