But CBS says the battle isn’t quite over

A Delaware Chancery Court judge ruled against CBS in its quest to keep its largest shareholder from interfering in an upcoming special board of directors meetings, denying the broadcaster’s request for a temporary restraining order.

CBS had filed suit on Monday, claiming that NAI could disrupt the meeting, which was to include a vote to issue a special dividend that would dilute NAI’s voting control of CBS from 80% to 17%. NAI filed its own response and yesterday also amended CBS’s bylaws to require any major issue be approved by a super-majority of directors.

“We are pleased by the court’s decision to deny CBS and its special committee’s unprecedented motion to try to deprive a shareholder of its fundamental voting rights,” NAI said in a statement. “The court’s ruling today represents a vindication of National Amusements’ right to protect its interests. As we intend to demonstrate as the case proceeds, the actions of CBS and its special committee amount to a grievous breach of fiduciary duties and show no regard for the significant risk posed to CBS and its investors.”

Heading into the shareholders meeting this afternoon, CBS did not appear disconcerted about the ruling, vowing to continue to fight for shareholders’ interests.

“Today’s ruling does not alter in any way the unyielding commitment of CBS and its Board of Directors to continue to act in and to protect the best interests of all CBS shareholders,” CBS said in a statement. “Notably, the ruling clearly recognizes that we may bring further legal action to challenge any actions by NAI that we consider to be unlawful, and we will bring such action if needed to protect the interests of all shareholders. We remain confident that we will prevail in the lawsuit previously filed by CBS and the members of its Special Committee.”

And despite the bylaw change, CBS said it will continue with its plans to vote on issuing the special dividend.

“As previously announced, the CBS Board will hold a meeting at 5 pm today [May 17] to consider declaring a dividend of shares of Class A common stock to all of the Company’s Class A and Class B stockholders, as is permitted under CBS’ charter,” CBS said in the statement. This dividend would more closely align economic and voting interests of CBS stockholders without diluting the economic interests of any stockholder.”