Viacom Board Approves Split

NEW YORK Viacom today officially signaled its intent to split the company into two separate, publicly traded units, now that its board of directors unanimously has given chairman and CEO Sumner Redstone the green light. The move had been talked about for several months, and the vote is the culmination of this plan. It is expected to be completed and go into effect the first quarter of 2006. Through a tax-free spinoff, the first company created (which will retain the Viacom name) will be led by Tom Freston, currently co-president and co-COO of the current Viacom. The new Viacom will include MTV Networks (including MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT, Country Music Television, Spike TV, TV Land and several other networks worldwide), BET, Paramount Pictures, Paramount Home Entertainment and Famous Music. The second company, to be called CBS Corp., will be led by Les Moonves, also co-president and co-COO of the current Viacom. Its holdings will include 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. The transaction will result in stockholders holding shares in both companies, and is expected to be tax-free to shareholders, according to a company announcement. Redstone will serve as chairman of both companies and will be the controlling shareholder of both.At the same time, Shari Redstone, Sumner Redstone's daughter, was named by the Viacom board to the newly created position of non-executive vice chairman of the board. She is currently president of National Amusements Inc., and has been a member of the Viacom board since 1994.Frederic Salerno, also a member of the Viacom board since 1994, and former vice chairman and CFO of Verizon Communications, was appointed to the newly created position of lead independent director. In the company's statement announcing the split, Redstone spelled out the differences between the two companies: " 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. 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."As for the new CBS, Redstone explained: "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. 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."A special committee has been created by the board to oversee the process of transition. Sumner Redstone will chair it, and Shari Redstone, Salerno, and Philippe Dauman, also a Viacom board member, will serve on it. Shari Redstone will be its vice chairman.

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Viacom Board Approves Split

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