NEW YORK – Mega-media company Viacom Inc., announced today that it will become two publicly traded mega-media companies.
Sumner M. Redstone, chairman and CEO, announced today that the company’s board of directors has unanimously approved the creation of two separate publicly traded companies in a transaction that will result in stockholders holding shares in both companies, and is expected to be tax-free to shareholders.
Following the spin-off, which will be completed in the first quarter of 2006, Redstone will serve as chairman and will be the controlling shareholder of the companies, which will both be headquartered in New York.
The new Viacom 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 cable networks around the world), BET, Paramount Pictures, Paramount Home Entertainment and Famous Music.
The other company, to be called CBS Corporation, 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. Additional announcements regarding specific details on the two new companies, including financial structures, management teams and a more detailed timetable for the process, will be made over the next several weeks.
“The new Viacom and CBS will have highly complementary business portfolios, leadership positions in their industries and superior management teams that have direct incentives to create greater shareholder value. In addition, each company will have distinct capital structures designed to generate higher returns,” said Redstone in a release.
“The new Viacom will focus on organic expansion through the creation of cutting-edge content, unrivaled brands, specialized and highly desirable demographics and the continuing expansion of delivery platforms,” he added. “We anticipate that this company’s stock will attract a higher trading multiple that can in turn be used for targeted acquisitions in promising areas. With the increased importance of wireless, online and video gaming businesses, the ability of the new Viacom to be opportunistic will be a distinct and powerful advantage. Additionally, we believe that the new Viacom’s significant cash flow generation will provide the opportunity for significant share repurchases.
“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 continued. “With industry leading positions in content creation and delivery, CBS will be extraordinarily well-positioned to maximize existing opportunities and execute on new areas designed to create value. Importantly, this company will also have the financial capability to return significant capital to stockholders through dividend payments and stock repurchases.”
