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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

Biden will reverse Trump's attempt to lift COVID related travel restrictions

Photo: Tasos Katopodis via Getty

The incoming Biden administration will reverse President Trump's last-minute order to lift COVID-19 related travel restrictions, Jen Psaki, the incoming White House press secretary, tweeted.

Why it matters: President Trump ordered entry bans lifted for travelers from the U.K., Ireland, Brazil and much of Europe to go into effect Jan. 26, but the Biden administration will "strengthen public health measures around international travel in order to further mitigate the spread of COVID-19," Jen Psaki said. Biden will be inaugurated on Wednesday, Jan. 20 and Trump will no longer be president by the time the order is set to go into effect.

Dominion sends cease and desist letter to My Pillow CEO Mike Lindell

Photo: Stephen Maturen/Getty Images

Dominion Voting Systems on Monday sent a cease and desist letter to My Pillow CEO Mike Lindell over his spread of misinformation related to the 2020 election.

Why it matters: Trump and several of his allies have pushed false conspiracy theories about the company, leading Dominion to take legal action. It's suing pro-Trump lawyer Sidney Powell for defamation and $1.3 billion in damages, and a Dominion employee has sued Trump himself, OANN and Newsmax.

Off the Rails

Episode 5: The secret CIA plan

Photo illustration: Aïda Amer, Sarah Grillo/Axios. Photo: Zach Gibson/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 5: Trump vs. Gina — The president becomes increasingly rash and devises a plan to tamper with the nation's intelligence command.

In his final weeks in office, after losing the election to Joe Biden, President Donald Trump embarked on a vengeful exit strategy that included a hasty and ill-thought-out plan to jam up CIA Director Gina Haspel by firing her top deputy and replacing him with a protege of Republican Congressman Devin Nunes.