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Viacom Explores Dividing Into Separate Publicly Traded Companies

Sumner M. Redstone, chairman/ceo of Viacom Inc. is exploring the possibility of dividing the corporations businesses into separate publicly-traded companies, to achieve important corporate objectives and to better deliver value to shareholders in a tax-efficient manner, a company statement read. Viacom expects to announce further details regarding the possible separation in the second quarter of 2005.

Redstone, who is pursuing this with his boards authorization, said, Viacom has an outstanding stable of assets with leadership positions and excellent future prospects and I have for several months been considering various alternatives to maximize our business opportunities in a way that would best serve our shareholders. It is clear that, despite our success in operating our businesses for maximum return, Viacoms businesses have inherently different growth characteristics and investment attributes that appeal to different types of investors.

The new publicly traded entities could each pursue strategic paths to maximize their long-term potential and be more appealing to investors with different objectives. The separation could highlight high-growth businesses, such as our MTV Networks, which would be operated by Tom Freston, and could give us added flexibility to pursue internal growth and to enhance these operations through the creation of an attractive high-multiple currency that could be used for accretive acquisitions, Sumner added.

Additionally, we believe the separation is likely to allow us to deliver greater value to our shareholders through a company operated by Les Moonves that would combine our leading CBS broadcast television businesses with our growing outdoor business and our high free cash flow operations, such as radio, he said. This group of assets would also have the potential to participate in a program of stock buybacks and increased dividends.

Sumner said the company with the MTV cable networks and the movie studio would likely attract growth investors while value investors would be interested in the one with the broadcast networks and radio.

Industry analysts also speculate that this could accelerate Sumners plan to step down as ceo by 2007.

Viacom ( is a leading global media company, with preeminent positions in broadcast and cable television, radio, outdoor advertising and online. With programming that appeals to audiences in every demographic category across virtually all media, the company is a leader in the creation, promotion, and distribution of entertainment, news, sports, music, and comedy. Viacoms well-known brands include CBS, MTV, Nickelodeon, Nick at Nite, VH1, BET, Paramount Pictures, Infinity Broadcasting, Viacom Outdoor, UPN, TV Land, Comedy Central, CMT: Country Music Television, King World, Spike TV, Showtime and Simon & Schuster.