Viacom Board Approves Spinoff of Slower-Growing Businesses
Viacom’s board approved a spinoff that would separate the media and entertainment giant’s slower-growing businesses from its cable networks, including Comedy Central, MTV and Nickelodeon. The tax-free deal is expected to close by March 31, the company said in a statement. As expected (CD March 18 p10), Tom Freston will lead the cable networks and movie studios, which will keep the Viacom name.
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Leslie Moonves will head the new company, named CBS. Besides the namesake broadcast network, it will hold the company’s radio and TV stations, plus its book publishing and outdoor advertising business. Controlling shareholder Sumner Redstone will remain chairman of both companies. Redstone’s daughter, Shari, will be vice chairman. Shari Redstone, a board member since 1994, has been taking an increasingly active and high-profile role at Viacom. Frederic Salerno, former Verizon CFO, will take the new position of lead independent director. He has also been board member 11 years.
Viacom’s growth strategy, which included buying CBS, has not been successful, analysts have said. Shares of the firm have fallen by about 1/2 in the past 5 years, and one investor said Tues. the spinoff likely won’t boost the lagging stock. The company has taken an $18 billion write-down of radio and outdoor assets, and sold Blockbuster.
“I don’t think splitting up the company will make a difference one way or another,” said Mark Greenberg of Invesco. “How come nobody gets the blame for all these mistakes that were done at Viacom over the past ten years?”
A Viacom spokesman didn’t return a phone call seeking comment by our deadline. The company’s action is part of a “deconsolidation” trend by media companies including Liberty Media.