The bitterest boardroom battle in recent memory has turned on a series of slights, verbal jousting and a physical altercation involving hands on a face that could determine the futures of both CBS and Viacom.

Shari Redstone, the controlling owner of CBS, has filed a complaint against the broadcaster and its chief executive Les Moonves in Delaware Chancery court, outlining her version of events in a saga that has pit the former allies against each other.

The filing further reveals Redstone’s master plan for CBS and Viacom, which also falls under her control. After a merger of the two, she proposes selling the united company for a much larger sum than either would fetch separately. She had tinkered with the idea for at least a year, according to sources, but this is the first public indication of that strategy.

From the complaint:

“Ms. Redstone discussed NAI’s long-term plans for CBS, focusing on a two-step process starting with a merger with Viacom that would strengthen both entities, and continuing thereafter with a sale or merger of the stronger combined entity, with NAI open to the possibility of relinquishing its voting control as part of that second transaction.”

Moonves was receptive to Redstone’s plan when she discussed it with him in the second half of last year, people familiar with the meeting say. As of January, he was still “supportive of a possible merger of CBS and Viacom,” according to her complaint.

People close to Moonves dispute the characterization of those meetings, saying the idea of selling a merged CBS and Viacom did not figure into their discussions.

Faced with declining sales at Viacom and the disintegration of the larger media industry under the weight of Facebook and Google’s growing dominance over audiences and advertisers, Redstone felt it was more urgent to consolidate that business with the more successful CBS, several sources say.

Redstone has said publicly she would only proceed with a merger if both companies enthusiastically supported the deal. She felt a combination would benefit CBS and Viacom since a bigger company would benefit from better negotiating leverage in any possible deal discussions.

She would also be willing to give up her control of the companies after a potential sale, according to the complaint.

This month, CBS filed a lawsuit against Redstone, and its board voted to remove her control of the company to prevent her from forcing through a merger with Viacom. CBS alleges Redstone was planning to remove board directors to pave the way for a deal. The outcome of the dueling complaints and CBS’s lawsuit will be determined in court, likely this summer. A date has yet to be set.

Redstone failed to unite the two companies in an attempt two years ago, but the idea for the merger reignited last summer when Verizon CEO Lowell McAdam approached Redstone about a possible deal for CBS. At the time, he had also mentioned interest in some parts of Viacom, people familiar with the matter say. Verizon did not immediately respond to request for comment. Other tech and telecom companies had separately approached Redstone about CBS, the Wall Street Journal reported this week.

Redstone has said she had no intention of replacing board directors to merge CBS with Viacom and had recommended against the deal a week prior to CBS’s lawsuit, according to her complaint. The filing challenges CBS’s version of the timeline.

The broadcaster and its board called Redstone’s court filing “not unexpected,” and went on to state, “We continue to believe firmly in our position.”

This isn’t the first time Redstone has changed her mind on the merger. In 2016 she asked the boards of CBS and Viacom to consider a deal, but changed tack after determining the two companies would be more valuable as separate entities.

What changed?

“The change for me was, ‘Oh my god, there is potential here, there is opportunity here, we can do this,’” she said onstage at Code conference in 2017. She had helped install a new management team at Viacom that prompted her to revise her vision for the company as a standalone.

In her complaint filed today, however, she indicated CBS’s lack of interest in the merger meant any discussions on the matter “were no longer productive.”

Sources say that in 2016, Redstone had decided that both CBS’s reluctance and the higher potential value as separate companies led to her pivot.

A major sticking point at the time had been Moonves’s demand for autonomy over any combined company; he asked for her assurance she would vote his way on all corporate matters, at which she balked, sources said at the time.

Redstone also cited the actions of CBS board director Charles Gifford, whom she had moved to remove from the board following several incidents, according to today’s filing.

In both 2016 and 2017, Gifford “had acted in an intimidating and bullying manner, including on one occasion by grabbing her face and directing her to listen to him,” her complaint read.

Redstone preferred to handle the matter by not renominating him to the board.

“Gifford later told her that he meant no offense, and that was how he treats his daughters when he wants their attention,” a footnote in the complaint read. “Ms. Redstone clarified that she was not Mr. Gifford’s daughter but instead the Vice Chair of CBS.”

In a statement, CBS called Redstone’s allegations “baseless” and that her “issue with Mr. Gifford is that he has always operated by an entirely different definition of what it means to be an independent director — namely to act in the best interest of all CBS shareholders.”

This article originally appeared on Recode.net.

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.

Shari Redstone, who controls both CBS and Viacom, wants to merge the two companies.

CBS hates the idea, and now we know how much it hates the idea: The CBS board is suing Redstone to stop the deal from going forward.

For the record, CBS is trying to remove Redstone’s grip on the company by diluting her voting shares so that she no longer has a controlling stake in the company. The Redstone family, like other media and tech bosses, has enjoyed effective control of CBS and Viacom, even though they are public companies, via a special class of shares. The CBS charter has a provision that would allow the company to dilute controlling owners, which, notably, was approved by Shari’s father, Sumner Redstone.

But the big picture is that CBS and its CEO Les Moonves pushed back against Redstone when she tried to force a CBS/Viacom merger in 2016, and now they are doing it again. Except this time, it seems impossible for them to repair the relationship, now that Moonves and company have moved to all-out war to stop the deal.

Even if CBS and Viacom somehow sort out a deal, the unprecedented move on the part of Moonves tells us it will become harder for him to remain a part of such a combined company. If, however, he succeeds in curtailing Redstone’s power, he’ll be an independent CEO and can he sell CBS to someone else.

In a statement, Redstone’s family company, National Amusements, said it was “outraged” by the suit and “strongly refutes its characterization of recent events.”

Redstone’s company went on to suggest the suit was prompted by concerns it raised about a CBS board director and “incidents of bullying and intimidation…dating back to 2016,” the statement read. The company didn’t cite the specific board member.

Important details, via CBS’s filing in a Delaware state court this morning:

• CBS says Redstone and her National Amusements holding company are breaching their fiduciary duty to shareholders by trying to force the deal.
• CBS, which believes it probably should merge with another entity as big media companies consolidate, has floated other deals instead of the Viacom pact. But the lawsuit alleges that Redstone “told the CEO of a potential acquirer of CBS that he should not make such an offer.” A person familiar with the exchange says the would-be buyer was Verizon — which also put out feelers about buying most of 21st Century Fox last summer.
• CBS argues that when Redstone first proposed merging Viacom and CBS in 2016, deal talks stopped as soon as CBS insisted that the merged company would operate outside her control for at least five years.
• CBS argues that it has tried to take the latest round of deal talks seriously, but that it remains far apart from Redstone’s pitch when it comes to price and governance (Redstone wants Viacom CEO Bob Bakish to have a management role in the combined company; Moonves wants nothing to do with them).
• CBS also accuses Redstone of leaking to try to influence the deal: “On numerous occasions, press reports have been sourced to ‘persons close to Ms. Redstone’ or ‘persons with knowledge of Ms. Redstone’s thinking’ or similar formulations, indicating that Ms. Redstone was the source of the leaks.”

Some background on the terms of the proposed merger and Redstone’s control:

• Redstone controls 79 percent of the voting rights of both CBS and Viacom through her family company, National Amusements.
• CBS has proposed through a special mechanism to dilute her control of CBS down to 17 percent, and the vote for that will take place on a special meeting on Thursday.
• Redstone had asked the boards of CBS and Viacom to explore a merger, and CBS offered to absorb Viacom is an all-stock deal valued at $11.9 billion. Viacom countered with a higher bid of $12.7 billion.

We’ll add to this as we go — we’ve asked CBS and Viacom reps for comment. And it is also possible that the lawsuit itself is just another extension of the brinksmanship between Redstone and Moonves, and that the two can get to a deal eventually. But it looks harder than ever.

Oh, also: CBS and Moonves are scheduled to put on their “upfront” presentation to advertisers on Wednesday — a high-gloss affair where they push the idea that CBS is the best place for marketers to put their money. That show just got a lot more interesting.

This article originally appeared on Recode.net.

What’s worth more? A combined CBS-Viacom with Les Moonves as CEO? Or a CBS-Viacom under another executive?

That’s the gamble Shari Redstone is making, as she considers firing Moonves if he doesn’t agree to her terms for a merged company, according to a report from CNBC’s David Faber.

Redstone, who controls both businesses through her family’s holding company, has urged the boards of each business to examine a merger, which means a deal will happen. The problem is over leadership (as well as price).

Everyone agrees Moonves should be the CEO of the merged company, but Redstone also wants Viacom CEO Bob Bakish to be Moonves’s second in command and get a seat on the board. Moonves prefers his current management team with COO Joseph Ianniello continuing as his primary deputy. He also doesn’t want Bakish to be part of the new business.

That’s an astounding position to take — on both sides. Redstone’s truculence is reminiscent of her father Sumner, who built his media empire around Viacom cable networks MTV and Nickelodeon, later adding CBS and Paramount film studios.

Shari Redstone’s hardline position is a big deal given how much Wall Street favors Moonves. He turned CBS from a faltering broadcast network into the most-watched channel on television. Bakish, who used to run Viacom’s international business, doesn’t cut a prominent profile among the media ranks.

To answer the above question, a company with Moonves is easily worth more. CBS lost $422 million in market value today and Viacom lost $213 million after CNBC’s report.

That tells us a few things:

• Redstone might be willing to take a hit to the stocks of CBS and Viacom if that means she can have more day-to-day control over the combined enterprise. Bakish, in some quarters, is seen as her proxy, sources say. The Hollywood Reporter’s Kim Masters writes that Redstone may have “developed a taste for control.”
• Redstone may also be factoring in Moonves’s tenure. He’ll turn 69 in October, and his contract runs through June 2021. If Redstone figures he won’t stick around much longer, it might be better to replace him now.
• As for Moonves, his reluctance to do this deal is well known. This is the second time Redstone has tried to combine the two. On the first attempt two years ago, Moonves had more clout and the media business wasn’t in as much disarray. His insistence on his own management team could be seen as his way of ensuring the best possible execution of a bad combination. It’s more probable he wants to keep Redstone out of his hair.
• Redstone is likely to be sued by shareholders if she goes through with firing Moonves. But that still wouldn’t change her ability to make the deal happen since she has clear control of both companies.

The context: The media industry is melting away as fewer people pay for television, and that’s sparked a series of big mergers. AT&T is fighting in court to buy Time Warner and Disney has bid to buy most of Fox. Comcast, by the way, is looking to spoil Disney’s deal by considering purchasing a key Fox investment, the European pay TV operator Sky. In other words, there are only so many major players left to partner off, and CBS and Viacom — which used to be one company — could only be left with each other.

A smarter idea: CBS should be sold to Amazon, and Viacom’s channels should be sold off to different buyers.

The background: Viacom and CBS used to be one company, but in 2005, then-chairman Sumner Redstone said splitting the two would provide more value. Viacom was seen as the faster growth business as cable networks were entering a bull cycle. CBS was the laggard then. Sumner also said he wanted to try to find a way to keep Moonves and Tom Freston — who both wanted to be CEO — so he split the companies. Freston was given leadership of Viacom.

The price: CBS’s offer for Viacom is an all-stock deal valued at $11.9 billion, which is below Viacom’s market value (now about $12.3 billion). Viacom countered with a higher bid of $12.7 billion. The thing to note is that Viacom is now the shrinking business (which explains CBS’s low-ball offer) while CBS has stayed relatively strong thanks to owning major sports rights such as the NFL. That agreement, however, will come up again in 2021-2022 when a renewal deal will come at a high cost and when tech players with big pockets could keep the NFL out of CBS’s reach.

The lesson: Redstone controls both CBS and Viacom through an unusual holding structure that gives her nearly 80 percent of voting rights for each company, despite both being publicly traded. Other media companies have similar ownership structures under the conceit that entertainment and news products sometimes require management decisions outside of investor pressure. But as is clear in this case, it can also be a liability. By the way, a bunch of publicly traded tech companies also have power concentrated in a few individuals, including Google, Snap and, yes, Facebook.

Here’s the media chart that explains it all:

This article originally appeared on Recode.net.

Rent the Runway CEO Jennifer Hyman says often when you’re buying clothes, you’re really just renting them.

“When you buy something for $9.99 and you know that it’ll fall apart after you wear it once … you’re going into the shopping experience knowing that you’re renting. So all I’m doing is making the rental process more efficient,” she said at Recode’s Code Commerce event in Las Vegas on Tuesday night.

That’s also why Rent the Runway’s subscription business will account for more than half of its annual revenue in 2018. The service — for $159 a month, women can rent as often as they want, four pieces at a time — is growing at a rate of over 150 percent a year, according to Hyman.

“I think about our subscriber growth, and that’s the metric I’m obsessed with,” she said, while not providing whole figures.

She did suggest in 2016 when she started the subscription service that it would generate more than $20 million annually and that it could eventually exceed the company’s first offering — women renting higher-end items for special events — in a few years.

That kind of growth has sparked interest from some clothing labels, she said, and the company plans to start offering its “wardrobe in the cloud” service to other brands. That also spotlights a larger ambition, what Hyman calls a “reverse logistics” business.

“We’re in the 100 percent return business,” she said. “This is driving millions of new customers into brands; most of our customers are wearing brands they’ve never tried before. We’re saying here’s a new revenue stream for you that not only gives you money, but also gives you customers and data.”

She did not specify which clothing brands plan to use its rental logistics service, but Hyman did highlight some other details:

• Rent the Runway includes over 550 brands.
• Subscribers to the service use Rent the Runway 150 days a year on average.
• The chief complaint among subscribers is they want items turned around more quickly, which suggests customers are likely to use the service as much as 200 days a year.
• The company plans to open a new distribution facility in Dallas.
• Rent the Runway has served 8.5 million customers since it started eight years ago and has raised $210 million so far.

But her company’s rapid success has also inspired a somewhat surprising mission statement: “We want you to buy less stuff.”

You can watch the full conversation below:

This article originally appeared on Recode.net.