On the evening of May 17, the CBS Corp. chairman-CEO, Shari Redstone and the rest of the CBS board gathered in a conference room at the company’s New York Black Rock headquarters for a monumental vote that could significantly reduce Redstone’s voting power in CBS and Viacom parent National Amusements Inc. Moonves addressed the issues on the table in unusually personal terms, according to multiple people with direct knowledge of the meeting.


At first, he explained his view that there was no compelling business rationale for reuniting CBS with Viacom — as Redstone was advocating — arguing that it was against the interests of all CBS shareholders. He explained that he felt he could not manage the company under such circumstances. He noted that his opinion was shared unanimously by CBS’ financial advisers, Crestview Partners, Moelis & Co. and Lazard, and the special board committee assembled in February to consider the proposed Viacom deal.


Then, Moonves added to the thick tension in the room by acknowledging his personal distress — “hurt” was the word he used, according to two sources — at reading stories as early as last year that he could be fired in a CBS-Viacom merger. The CBS camp believes that an August 2017 report by BTIG Research’s widely read media analyst, Rich Greenfield, stating Moonves should be fired if he doesn’t agree to a CBS-Viacom merger was informed by sources connected to the NAI and Redstone world (“We are 100% independent — we are nobody’s lap dog,” says Greenfield via email).


Redstone also spoke briefly at the session, according to sources. She reiterated the assertions that NAI has made from the beginning of the legal brawl: It had no intention of forcing a merger over the opposition of either company, nor did it ever intend to oust Moonves or replace CBS board members. On Tuesday, NAI filed a lawsuit against Moonves and other members of the CBS board, accusing them of breaching their fiduciary duties with the effort to dilute NAI’s voting interests, among other allegations.


During the meeting, Redstone addressed a recent focus on removing longtime CBS director Charles K. Gifford (who was in the room), noting it was because of instances of his allegedly bullying her, not because she disagreed with his opinion on the merger consideration. Redstone had pushed for the replacement of Gifford, 75, who is chairman emeritus of Bank of America. That was one factor that set CBS off on its legal strategy against National Amusements. CBS and some of its directors are incensed that Gifford’s behavior has been questioned in the context of the corporate battle.


CBS had filed suit against NAI on May 14, accusing its controlling shareholder of breach of fiduciary duty by pursuing an agenda that went against the interests of all CBS shareholders. NAI, which also controls Viacom, has vehemently denied CBS’ allegations and vowed to stop the effort to strip NAI of its voting control in the company.


In the minds of many in the media industry, the legal blowup has irreparably damaged the relationship between Redstone and Moonves. It is widely believed that if CBS loses its fight to slash Redstone’s voting power from 80% to 20%, Moonves will leave the company. Business insiders find it hard to fathom CBS without Moonves, who has been a force there for more than 20 years. Both Moonves and Redstone declined to be interviewed for this story.


The back-and-forth between the two threatens to get personal. “[They] each have their business cases to make, but it has been completely tied into their personalities, their identities as leaders, as businesspeople,” says Syd Finkelstein, a professor of management at Dartmouth’s Tuck School of Business who studies leadership and corporate governance. “Once that happens, it becomes an emotional battle, not just a strategic one.”


Moonves has for decades presented the most confident of facades, no matter the challenges surrounding him, including that CBS is up against significantly larger competitors amid a growing spate of megamergers: Comcast controls NBCUniversal; Discovery snapped up Scripps Networks; Disney is set to buy the bulk of 21st Century Fox if it isn’t outmaneuvered by Comcast; and AT&T is poised to acquire Time Warner.


The TV industry faces a host of wrenching disruptions. There’s new competition from Apple, Netflix and Amazon. Onetime couch potatoes who would watch “NCIS” and “The Big Bang Theory” on a specific day and time on the living-room screen have migrated to on-demand streaming of those series and dozens like them.


None of it appears to have rattled the CBS leader. Under his aegis, the network has started new digital businesses, including CBS All Access, a streaming-video subscription service. Ratings may be shrinking, but CBS generally captures the most viewers of any TV network. And it has worked to build an overseas presence through syndication and the purchase of an Australian TV company. “As you can see from our results, the strategy we have laid out for you is clearly working, and the good news is there is so much more to come,” Moonves told investors on a recent first-quarter earnings call.


Redstone, who leads National Amusements, sees the need to bulk up. She believes CBS and its sister company, Viacom, would be worth more together than they are apart, particularly in a world where rivals are getting bigger. Her thinking, says a person familiar with it, is that Viacom’s cable networks attract a young, diverse viewership that would add breadth to CBS. The company’s vaunted Paramount studio and its infrastructure in foreign markets would only help. Besides, Viacom, under CEO Bob Bakish, has worked to stabilize its operations after a tumultuous period led by then-CEO Philippe Dauman. Indeed, executives at NAI and Viacom were under the impression earlier this year that the companies had reached an agreement on economic terms to combine. Executives at CBS never felt that way, people familiar with the company say.


At CBS, the thinking is that the combination is not in the interest of shareholders. One worry is that having to negotiate carriage deals for Viacom and CBS together would crimp the leverage the latter enjoys with cable and satellite distributors. CBS may be better off seeking its own fortune, argues Bernstein analyst Todd Juenger in a recent research note: “We believe as a stand-alone entity it has the cleanest story in all of media: no bloated group of superfluous networks, growing, generating a lot of cash, with a lot of potential strategic value” to an acquirer.


Moonves and Redstone were not believed to have spoken one-on-one during the May 17 meeting. The roughly hour-long session ended with an around-the-table vote on the proposal for a stock dividend that would reduce Redstone’s voting power in the company from 80% to 20%.


Among CBS’ 14 directors (some participating by phone), there were 11 ayes and three nos, delivered by Redstone and two directors (Robert Klieger and David Andelman) affiliated with Redstone or NAI. The vote amounted to a rebuke of NAI by a majority of the directors. One — Martha Minow, a former dean of Harvard Law School — was suggested by Redstone for the board just last year. Her vote on May 17 and her decision to sign her name as a plaintiff to CBS’ lawsuit against NAI was significant for both sides. For CBS, it underscored that a distinguished legal scholar endorsed its legal position.


For NAI, it demonstrated that Redstone’s focus was recommending strong, independent-minded directors for the boards of CBS and Viacom. The session ended with a second vote: on whether to postpone CBS’ annual meeting, which had been scheduled for May 18, in light of the upheaval. That vote fell out along factional lines, with Redstone, Klieger and Andelman pressing for the meeting and the others opting to wait.

“For Redstone, this is a legacy thing. It’s a personal thing. It’s a family thing, and I’m sure there’s some ‘What would my dad do if he were in my shoes.’ For Moonves, he’s been the king of broadcast TV for some time. He feels like he is CBS. He’s like the modern version of [William S.] Paley.”


Sydney Finkelstein, faculty director, Center for Leadership, Tuck School of Business, Dartmouth

“I think Leslie is really interested in maximizing shareholder value for CBS, and I think Shari is interested in maximizing shareholder value for CBS and Viacom together,” says Laura Martin, a media analyst at Needham & Co. “They have different agendas.”


By now, the CBS turnaround story under Moonves is well-known.


In mid-1995, the red-hot studio executive joined an ailing CBS from Warner Bros. TV, where he’d launched “Friends” and “ER” to out-of-the-box success, both in the fall of 1994. Before that he’d been part of the entrepreneurial culture at Merv Adelson’s Lorimar banner, an independent TV producer that had as much volume as some of the major studios in the 1970s and ’80s (think “Dallas,” “Knots Landing,” “Falcon Crest,” “Perfect Strangers,” “Full House”). Moonves, a native of New York, famously started his career as an actor before moving into television development.


He came in as entertainment president of CBS and shot up the ranks. It took a few seasons, but he steadily bolstered the beaten-down network with hits such as “Everybody Loves Raymond,” “CSI” and reality smash “Survivor.” Pro football returned to the network in 1998 after a four-year hiatus at the insistence of Moonves, who recognized the importance of live sports to the network’s overall clout in the marketplace.


Then as now, Moonves is known for his close interest in virtually every aspect of CBS’ business, particularly the material that lands on air. Whether reviewing the lineup of performers for the annual Grammy Awards telecast or weighing in on the casting of supporting players for pilots, Moonves is seemingly everywhere at once. The micromanaging factor is simply part of the working culture at CBS. Yet those who have worked shoulder-to-shoulder with him say he has incredible instincts about casting, audience tastes and the mood in the vast expanse of the country between the coasts. He’s right more often than he’s wrong, CBS veterans and alumni say.


One such fan is producer Arnold Kopelson, who has served on the CBS board for the past 11 years and previously worked with Moonves on the TV series “The Fugitive.” “I have seen him operate as if he were my partner in the production of the series, and thereafter, as chairman-CEO guiding CBS’ many divisions while at the same time bringing the network to extraordinary success,” he says. “He has my highest respect and friendship and has earned the respect and admiration of all those who have had the privilege of working with him.”


When Sumner Redstone’s Viacom acquired CBS in 2000, Moonves was empowered and eventually took over the top job at CBS from Mel Karmazin in mid-2004. Only 18 months later, Redstone, who turned 95 recently, split CBS and Viacom back into separate companies to boost a sagging stock price. In January 2006, Moonves was named president-CEO of CBS Corp., which was expected to be the slow-growth company with a predictable stock good for “widows and orphans.” Viacom was supposed to be the sexier growth stock play. But the trajectories of the two companies proved just the opposite.


Viacom struggled with management turnover and the defection of younger viewers that hit cable networks like MTV and Nickelodeon first. CBS, meanwhile, has remained a contender despite commanding far fewer resources than its peers. It has deftly leveraged its content assets to command top dollar in the licensing bonanza from streaming services for most of the past decade. And CBS and Fox were the first networks to go to the mat with cable and satellite operators to demand high fees for the rights to carry their programming. CBS has said it expects revenue from those deals to be as high as $2.5 billion a year by 2020.


Moonves long ago developed a reputation as a demanding and hard-charging boss who insisted on unconditional loyalty from his inner circle but gave it in return. He has displayed that trait in standing his ground on the issue of CBS chief operating officer Joe Ianniello continuing in the role were CBS and Viacom to merge. Moonves takes up a lot of the spotlight at CBS — he’s a bold-faced name in Vanity Fair, well-loved on Wall Street and a charismatic leader of 12,700 employees, the vast majority of whom work in the U.S. But insiders point to Ianniello’s underappreciated role in driving the network’s business strategy with content licensing, distribution agreements, reshaping its relationship with affiliates and guiding its spin-offs of non-core divisions during the past few years. Two examples: the CBS Outdoor advertising unit and the sale of its radio station group to Entercom last year. Both deals provided windfalls that allowed CBS to invest more in content and distribution assets.


Ianniello has been positioned as a potential Moonves successor — a clause in his contract calls for a $70 million payout if he is not so named. From NAI’s perspective, the investment in Ianniello was never spelled out or agreed to. This communication disconnect is another source of friction between Shari Redstone and Moonves.

“It’s safe to say that Leslie Moonves is the most talented programming executive at a media company today. … He has the longest track record. … CBS could be sold to a bigger company, and that strategy would be better. Shareholders deserve to have an auction run for CBS to get a sense of how valuable it is.”


Laura Martin, media analyst, Needham & Co.

At 68, Moonves has undoubtedly started to think about his legacy. He doesn’t want his Hall of Fame run at CBS tarnished at the end, if a merger with Viacom were to prove difficult. “He wants his bust in the Television Academy plaza,” says a longtime CBS executive.


Those who know Moonves say he has great admiration for how his friend Bob Iger led Disney’s surprise acquisition bid for 21st Century Fox’s key studio and cable assets. Moonves wants to position CBS for the future with an M&A transaction that bolsters the storied TV company in an environment of giant global competitors. By multiple accounts, he had hoped to engage Time Warner in a deal before AT&T swooped in on the parent of Warner Bros., Turner and HBO in 2016. An overture from Verizon last year was waved off by Shari Redstone because of the Viacom situation (Redstone disputes CBS’ characterization of this interaction in its lawsuit). In Moonves’ view, having Viacom in the mix is a hindrance to finding the right long-term dance partner for CBS.


Moonves has been the ongoing target of shareholder activists who criticize his exorbitant paychecks, which rank among the highest in the nation for a CEO. But nobody can say he hasn’t worked day and night for the betterment of CBS for the past 23 years.


As the battle with Redstone escalated, speculation increased that Moonves would soon part ways with CBS, either by walking or getting fired. There was talk that he launched the legal offensive against NAI cavalierly, knowing he had an enormous ($150 million or more) severance package lined up. But those who know him say he is driven to fight for what he sees as right for CBS because the last thing he wants is to make a hasty departure and leave employees, who have 401(k)s tied up in CBS stock, in the lurch. If nothing else, the legal fight is an effort for Team Moonves to say: At least we went down swinging.


Some observers think he may do just that. “When somebody controls 80% of the company, they are ultimately going to win,” says Jeffrey A.


Sonnenfeld, senior associate dean for leadership studies at the Yale School of Management. But CBS is acting under a provision placed in its bylaws by Sumner Redstone that says the company may challenge the controlling shareholder if it feels it can prove NAI is not acting in the interest of all CBS investors. In the end, it looks as if the courts will decide the relationship between Redstone and Moonves. “This is almost a Shakespearean drama,” says Sonnenfeld. “It’s almost too over-the-top for Hollywood.”