MUMBAI: Viacom's board of directors on Tuesday approved the division of the media giant into two separate companies one built around MTV Networks and the other around CBS. The two new companies will be known as Viacom Inc. and CBS Corp.
It was also an occasion for Viacom chairman and CEO Sumner M Redstone to officially institute his succession plan by naming daughter Shari Redstone to the newly created position of non-executive vice-chairman of the board. Sumner Redstone, president of National Amusements Inc., has been a member of the Viacom board since 1994. National Amusements is the privately held movie theater firm through which Redstone controls Viacom via a stake of about 71 per cent.
As had been reported earlier by Indiantelevision.com Redstone has been exploring the division of the company into two units in order to further unlock value. Following the spin-off, which is expected to be completed in early 2006.
Viacom Inc. will be led by Tom Freston and will be comprised of MTV Networks (including MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT: Country Music Television, Spike TV, TV Land and many other networks around the world), BET, Paramount Pictures, Paramount Home Entertainment and Famous Music. CBS Corp will be led by Les Moonves and will combine the CBS and UPN broadcast networks, Viacom Television Stations Group, Infinity Broadcasting, Viacom Outdoor, the CBS, Paramount and King World television production operations, as well as Showtime, Simon & Schuster and Paramount Parks.
Said Redstone, We celebrate our past successes by stepping forward to embrace the future. This transaction is the logical extension of the strategic vision that created Viacom and recognises the inherent diversity of our assets as well as the changing business environment.
"We believe that this transaction will enable Viacom shareholders to fully benefit from the important gains we realised in building this company by fully unlocking our significant untapped potential and creating new opportunities to build on our leadership positions, maximise earnings growth and fully exploit our considerable strengths.
I want to commend the Viacom board of directors and the Viacom management team for the careful and thorough strategic analysis that led to this important decision. The decision to create two new companies was the result of an intense study by the board, which worked closely with the companys management and carefully analysed all strategic options before reaching its conclusion.
"The board believes that the transaction will result in two strong, focused and nimble companies, and will better enable management to directly impact and maximise the strengths of their respective businesses. Additionally, the board believes that the transaction will provide current and potential stockholders with attractive investment options that are more closely aligned with their various investment objectives.
Talking about the two companies Redstone said, The new Viacom will focus on organic expansion through the creation of cutting-edge content, unrivalled brands, specialised and highly desirable demographics and the continuing expansion of delivery platforms."
The new CBS will be a strong generator of free cash flow with industry-leading positions across television and radio broadcasting, television production and out-of-home advertising, Redstone said.
