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Shari Redstone won a round in her fight with Les Moonves and CBS. What’s her next move?

CBS is afraid that Redstone wants to merge CBS with Viacom.

Viacom and CBS Vice Chairman Shari Redstone, CBS CEO Leslie Moonves and former Disney chairman Michael Eisner
Shari Redstone, Leslie Moonves and Michael Eisner
Drew Angerer / Getty

It was a battle of the media titans, and Les Moonves lost the first round.

The chief executive of CBS, who just yesterday received a standing ovation from advertisers at the broadcaster’s upfronts presentation at Carnegie Hall, failed to convince a judge it was in CBS’s best interests to dissolve Shari Redstone’s control over the company.

The ball is now in Redstone’s court, and we lay out her options below.

First, some quick background: On Monday, CBS sued Redstone — whose family company controls CBS through special voting shares — to stop her from trying to force through a merger with cable conglomerate Viacom, a company that also falls under Redstone’s control. CBS’s audacious maneuver involved issuing a special dividend that would have severely watered down her voting shares.

In conjunction with its suit CBS also requsted a temporary restraining order against Redstone to prevent her from interfering with CBS’s action to remove her control.

In a 17-page opinion, Chancellor Andre Bouchard of the Delaware Court of Chancery denied CBS’s request, highlighting Redstone’s rights as the controlling shareholder.

But Bouchard’s ruling did include enough room for CBS to take legal action if Redstone later made unilateral changes that CBS deemed harmful, such as replacing board directors to mandate a merger.

Here are some possible scenarios for what happens next:

  • Redstone, through her family company National Amusements, has insisted that she had no intention of swapping out CBS board directors to allow a deal with Viacom. Even if she did attempt her own Saturday Night Massacre, the judge’s ruling here serves as a warning. Similarly, any plan to oust Moonves could be seen as harmful and CBS could take Redstone back to court. In other words, she can’t do anything — for now.
  • She could wait out Moonves’s contract, which ends in the middle of 2021, nominate new board directors and then merge with Viacom. That might be too late given how the media landscape is already consolidating: The media conglomerate game of musical chairs is already in full swing.
  • Since the CBS special committee already recommended against a merger with Viacom, she could now sue the board and take her merger thesis to court and argue CBS’s directors are in breach of their fiduciary duty to shareholders. She did something similar to Viacom’s board when it was led by Philippe Dauman to stop him from trying to sell Paramount Studios.
  • One other scenario actually has CBS moving the ball. It still intends to go ahead with its special meeting at 5 pm ET today to consider declaring the dividend and thus sapping Redstone of her control. But Redstone changed the company’s bylaws in an eleventh-hour move yesterday, now requiring 13 of the 14 board members to approve the plan. That means the vote is likely to fail since three of the directors are Redstone appointed.
  • Update: CBS hasn’t accepted Redstone’s bylaw change, according to sources, basing its interpretation on an SEC rule stating amendments can’t go into effect for a period of 20 days. That means CBS has enough votes to issue the dividend and reduce her controlling shares to a minority. If that comes to pass, Redstone will likely dispute the results of the vote, and CBS will argue the issue in court.
  • Update 2: CBS board declares the dividend following a vote of 11 of 14 directors in favor. If the dividend is enacted Redstone’s current 79 percent control will be reduced to 20 percent.
  • CBS can’t issue the dividend until a Delaware court rules on the case, the company said in a statement. If it wins, CBS can then successfully divorce itself from Redstone control.
  • If CBS loses, Redstone will maintain her 79 percent voting rights. But that still doesn’t mean CBS will work a deal with Viacom since Redstone has said she won’t take any action without the network’s assent.
  • Moonves’s hands would still be tied. Redstone has said she would stop CBS from pursuing a sale or an acquisition with any company that would relinquish her hold over the broadcaster. Moonves has previously discussed with CBS executives the idea of selling the network to a major tech or communications company, according to sources.

This article originally appeared on Recode.net.

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