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Photo by Tara Ziemba/Getty Images

A Delaware judge has just ruled against CBS, in its effort to strip company control from Shari Redstone's National Amusements Inc.

Why it matters: This could pave the way for a merger with Viacom, and also lead to major management changes at CBS (whose stock is down more than 6% on the ruling).

Just yesterday, CBS execs were projecting confidence.

A key quote from the judge:

"In my opinion, particularly given CBS’s proclaimed commitment to independent board governance, these allegations are sufficient to state a colorable claim for breach of fiduciary duty against Ms. Redstone and NAI as CBS’s controlling stockholder."

NAI's statement:

“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. 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.”

CBS' statement:

"The judge today found that the allegations in our lawsuit ‘are sufficient to state a colorable claim for breach of fiduciary duty against Ms. Redstone and NAI as CBS’s controlling stockholder.’ We could not agree more. While we are disappointed that the judge did not grant a TRO, 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 do so. We remain confident that we will prevail in the lawsuit previously filed by CBS and the members of its Special Committee.
As previously announced, the CBS Board will hold a meeting at 5PM today 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. This dividend would more closely align economic and voting interests of CBS stockholders without diluting the economic interests of any stockholder.”

What's next? CBS likely will pursue further litigation but, for now, its bylaws require a 90% supermajority to dilute Redstone. Given the board dynamics, it won't meet that threshold.

Go deeper

Ben Geman, author of Generate
27 mins ago - Energy & Environment

What we’re watching during the final countdown to COP26

Illustration: Eniola Odetunde/Axios

This is shaping up as a critical week for climate policy in the U.S. and worldwide.

Driving the news: Democrats are in the final stages of trying to craft the big social spending and climate package they're trying to move on a thread-the-needle party-line vote.

"Atmospheric river" swings Northern California from drought to flood

Satellite view of the bomb cyclone swirling off the coast of the Pacific Northwest and the atmospheric river affecting California on Oct. 24. Photo: CIRA/RAMMB

A series of powerful "atmospheric river" storms are delivering historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest.

Why it matters: The atmospheric river, packing large amounts of moisture, was causing Northern California to whiplash from drought to flood, as it slowly moved south overnight. It's triggered widespread power outages, flooding and mudslides.

Facebook's pivotal week

Illustration: Aïda Amer/Axios

They're battening down the hatches at Facebook headquarters this week as the company faces a trifecta of tumult: a continuing wave of negative press coverage fueled by document leaks, a critical earnings report Monday and a reported name change looming.

The big picture: All this is unfolding as Mark Zuckerberg tries to transform Facebook from a social network into the prime mover behind a new "metaverse" of VR- and AR-driven remote work and play.