Early Viacom split

Breakup now set to happen by end of year

Viacom said Tuesday that it expects its split into two publicly traded companies will be completed by the end of the year, several months earlier than previously anticipated.

The conglom has indicated in prior announcements that the split, one of the media world’s most dramatic corporate revamps in years, would become official in the first quarter of 2006.

Viacom disclosed in March that it was mulling a split; approval by the board of directors made the move official in June. Viacom disclosed the terms of the split, financials and the management lineups of the two new companies in an SEC filing earlier this month. The split is particularly bold because it basically reverses the five-year-old Viacom-CBS merger.

Viacom chairman-CEO Sumner Redstone has declared the age of the conglomerate over and said “a friendly divorce is better than marriage.” He says the assets that are grouped into the two new entities make sense together, while the combined package didn’t anymore. Mostly, he wants to boost Viacom’s stock price and thinks the two companies, particularly the so-called new Viacom led by Tom Freston, will be worth more alone than together.

Waiting for reaction

The entities are already operating separately. But Wall Streeters, Hollywood insiders and Redstone’s media mogul peers are intensely curious to see how the formal split will be received by the market. Media shares have been stuck in the doldrums in recent years. If this move is successful in boosting the share price, other media companies are sure to follow suit. If not, they’re likely to put the brakes on breakups.

Freston’s new Viacom includes MTV Networks (MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT: Country Music Television, Spike TV, TV Land, BET), Paramount Pictures, Paramount Home Entertainment and Famous Music.

CBS Corp., headed by Leslie Moonves, houses the CBS Television Network, UPN, Infinity Broadcasting, Viacom Outdoor, the Viacom TV stations, Paramount Television, King World, Simon & Schuster, Showtime and Paramount Parks.

Radio daze

Idea is that the sluggish radio business from the CBS side has been dragging down fast-growing assets like MTV. Many analysts expect growth to accelerate and the stock to rise at Freston’s company post-split.

That’s despite the fact that Viacom’s current stock has gone down, not up, since the split was announced.

The shares did jump briefly in March on the first news of the split, from about $34 to $37. But they closed Tuesday to $31.18 — not far abovetheir 52-week low of about $30.

“I’m following my instincts, and I’m convinced we are doing the right thing,” Redstone told Daily Variety in June.

Investors — and Viacom employees with stock options that are underwater — hope he’s right.

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