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Last Updated: Wednesday, 15 June, 2005, 05:52 GMT 06:52 UK
Viacom agrees to split business
Viacom chairman Sumner Redstone
Viacom boss Sumner Redstone will control both of the companies
The board of US media giant Viacom has approved a plan to split the firm into two, separating channels such as MTV from TV networks and radio stations.

The move is designed to realise greater value from Viacom's fastest-growing assets such as MTV after the firm made heavy losses earlier this year.

The restructuring will see the CBS TV network and other assets hived off into a separate stock market traded firm.

Viacom boss Sumner Redstone will continue as chairman of both firms.

'Logical extension'

The demerger is seen as a radical solution to Viacom's poor stock market performance in recent years.

The company believes that it has been held back by its ownership of increasingly mature businesses such as CBS and its Infinity Broadcasting radio operation.

These businesses will now be spun off into a separate company, CBS Corporation, while Viacom's other assets - including MTV Networks, Paramount Pictures and Paramount Home Entertainment - will be housed in another company retaining the Viacom name.

By splitting the company, they are streamlining their assets so they can get a more complete valuation
Frederick Moran, Stanford Group

"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," Mr Redstone said.

Viacom suffered a $18bn (9.4bn) post-exceptional loss in the final quarter of last year after writing down the value of many of its assets.

The restructuring - likely to come into effect early next year - has had a mixed reception from analysts.

"By splitting the company, they are streamlining their assets so they can get a more complete valuation," said Frederick Moran, an analyst with Stanford Group.

However, Hal Vogel - president of Vogel Capital Management - told Agence France Presse that he did not think the move was "compelling".


SEE ALSO:
Viacom may split into two firms
17 Mar 05 |  Business
Radio review brings Viacom loss
24 Feb 05 |  Business


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