Viacom May Split In Two

Media conglomerate Viacom yesterday announced it is considering splitting itself into two companies, a move that would separate Star Trek studio Paramount from the network on which the show has aired for the past eleven years, UPN.

According to a Reuters report, Viacom thinks it will be able to boost shareholder value by separating fast-growing units like MTV and the other Viacom cable networks from more mature arms like CBS and Viacom's radio stations. A split would also mean Viacom wouldn't have to be concerned anymore about a protracted succession battle once current company head Sumner Redstone steps down, as each of the current two heirs apparent would be put in charge of their own company: Les Moonves at CBS, and Tom Fresnon at MTV.

Paramount Pictures, the studio producing the Star Trek films and television series, would likely be part of Tom Fresnon's MTV/cable network company, where it currently also resides. This unit would also keep the Simon & Schuster publishing arm, which publishes the Star Trek novels, as well as SpikeTV, which owns the TNG, DS9 and Voyager cable rerun rights, meaning that all of Viacom's main Star Trek units would still be part of the same company.

Although Viacom did not specifically mention this yesterday, it seems likely UPN would remain a part of the CBS unit, which has already been in charge of UPN for the past several years. Separating UPN from Paramount would be ironic, considering the network was set up primarily so that Paramount Pictures would have an extra outlet for its own television productions, something to which the full name of the network - United Paramount Network - still refers.

The current Viacom media empire has its roots in 1954, when then 31-year-old Sumner Redstone took over his family's movie theater chain. Over the years, he kept buying more entertainment companies, until in the late 1980s he mounted a daring bid to buy a media company known as Viacom, which then included cable networks such as MTV, Showtime and Nickelodeon. The company went forwarded under the Viacom banner, and in 1994 outbid USA Networks to obtain Paramount Pictures - the same year that Blockbuster Video was also added to the mix. But the company's biggest acquisition came in 2000, when Viacom spent $50 billion to obtain the CBS television network.

Initially, the Viacom-CBS merger proved profitable for shareholders, as Viacom stock reached an all-time high of $71.63. But when the economy went into recession and the advertising market took a sharp downturn, Viacom was hit harder than other media companies, and its shares have been trading between $35 and $40 ever since. Last year, the company already spun off Blockbuster Video, and today the New York Times reported investment bankers had been agressively promoting a full Viacom split ever since.

More information on this can be found in the original Reuters report.

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