Viacom Announces Plan to Split Company

Jun 14, 2005  •  Post A Comment

Viacom’s board of directors Tuesday afternoon voted to break up the media giant into two publicly traded companies, a move that had been widely expected in the company’s bid to juice its stock price.

The board also elected Viacom Chairman and CEO Sumner Redstone’s daughter, Shari Redstone, as nonexecutive vice-chairman of the board, another move that had been widely expected, since Ms. Redstone’s profile at Viacom has grown in recent months. She previously was a board member and currently is president of National Amusements, the Redstone family theater chain based in Boston.

The proposed split would be a tax-free spinoff and create a new company that would retain the Viacom name and be led by Viacom co-Chief Operating Officer Tom Freston. The new Viacom would comprise MTV Networks, BET, Paramount Pictures, Paramount Home Entertainment and Famous Music.

The remaining assets would fall under the proposed name of CBS Corp., which would be led by Viacom co-COO Leslie Moonves. CBS Corp. would include the CBS and UPN television networks, Infinity Broadcasting, Viacom Outdoor, the CBS, Paramount and King World television production units, premium cable network Showtime, publishing giant Simon & Schuster and the Paramount Parks theme-park business.

Mr. Redstone would be controlling shareholder and chairman of both companies, which will continue to be based in New York. The split is expected to be completed by the 2006 first quarter.

The company said that it would provide further details about the management and financial structure of the two companies in the coming weeks.

Viacom first went public with its proposed breakup of the media giant in April, arguing that breaking up of the media titan along the lines of putting growth assets into one company and cash-generating assets into another would help solve investor confusion and enable shareholders to buy into the company that best fits their investment needs.

The move also solves what would have been one of the most closely watched derbies in entertainment: the battle between Mr. Moonves and Mr. Freston for the CEO post when Mr. Redstone retires by December 2007.