Viacom Board Approves Plan To Split Company in Two
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Viacom approved Chairman Sumner Redstone’s plan to split into two companies to help boost a share price that’s fallen 48% in five years and free the faster-growing cable-television business from the CBS broadcast network.
Directors also yesterday elected Mr. Redstone’s daughter, Shari Redstone, 51, as non-executive vice chairwoman, New York-based Viacom said in a statement. The tax-free split should occur in the first quarter of 2006, and Mr. Redstone, 82, will remain chairman of both companies.
Mr. Redstone is breaking up a business that he spent two decades building into the third-largest American media company. He’s seeking to reverse a slide in asset values caused by a lack of growth at CBS and the Infinity radio stations. The MTV cable network and Paramount film studio will anchor a unit run by Thomas Freston that will keep the name Viacom. The CBS and Infinity units will be renamed CBS and be run by Leslie Moonves.
“Sumner Redstone hopes dividing the company into one and one will add up to three,” said Porter Bibb, managing partner of New York-based Mediatech Capital, which invests in and consults for media companies. “He’s putting CBS, Infinity, and the outdoor unit into the slower-growth company, and on the other side is MTV and Paramount, which he believes has a lot of growth potential.”
Viacom’s Class B shares have risen 1% since March 15, the day before the company announced the proposed breakup.
Viacom’s breakup also resolves the question of management succession by giving each of Mr. Redstone’s two lieutenants a company to run. In June 2004, Redstone named Messrs. Moonves and Freston as co-presidents of Viacom and said one of them would succeed him when he retires. Mr. Freston has overseen the MTV and Paramount units, while Mr. Moonves has been in charge of CBS and the UPN broadcast network.
In addition to the CBS network and station group, CBS Corporation will hold Infinity Broadcasting, the second largest American radio broadcaster after Clear Channel; the Infinity billboard advertising unit; the Paramount TV production studio; the UPN network; the Showtime cable channel; and the Simon & Schuster publishing house.
