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Viacom Splits Into Two Publicly Traded Companies

After putting the pieces in place, Sumner M. Redstone, chairman/ceo of Viacom Inc. announced today (June 14, 2005) that the companys board of directors has unanimously approved the creation of two separate publicly traded companies from the companys leading entertainment brands through a spin-off to Viacom stockholders.

The new company, created through the tax-free spin-off, will retain the Viacom Inc. name and will be led by Tom Freston. The new Viacom will be comprised of MTV Networks (including MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT: Country Music Television, Spike TV, TV Land and many other networks around the world), BET, Paramount Pictures, Paramount Home Ent. and Famous Music.

The other company, to be called CBS Corp., will be led by Leslie Moonves and will combine the 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.

Stockholders will hold shares in both companies, a transaction expected to be tax-free to shareholders. Following the spin-off, which is expected to be completed in the first quarter of 2006, Redstone will serve as chairman and will be the controlling shareholder of the companies, both headquartered in New York City.

Additionally, the Viacom board of directors has named Shari Redstone to the newly created position of non-executive vice chairman of the board. Shari Redstone, president of National Amusements Inc., has been a member of the Viacom board since 1994.

In line with its ongoing corporate governance initiatives, Frederic V. Salerno, a member of the Viacom board since 1994 and former vice chairman/cfo of Verizon Communications Inc., has been appointed to the newly created position of lead independent director of Viacom. Salerno is chair of the boards nominating and governance committee.

Sumner Redstone said, Today we celebrate our past successes by stepping forward to embrace the future. This transaction is the logical extension of the strategic vision that created Viacom and recognizes the inherent diversity of our assets as well as the changing business environment. We believe that this transaction will enable Viacom shareholders to fully benefit from the important gains we realized in building this company by fully unlocking our significant untapped potential and creating new opportunities to build on our leadership positions, maximize earnings growth and fully exploit our considerable strengths.

He added, The decision to create two new companies was the result of intense study by the board, which worked closely with the Companys management and carefully analyzed all strategic options before reaching its conclusion. The board believes the transaction will result in two strong, focused and nimble companies, and will better enable management to directly impact and maximize the strengths of their respective businesses. Additionally, the board believes that the transaction will provide current and potential stockholders with attractive investment options that are more closely aligned with their various investment objectives.

A special committee has been formed, which he will chair, that will assist and monitor the process of creating the two companies. Also serving on the committee will be Viacom board members Frederic Salerno, Philippe Dauman and Shari Redstone, who will serve as vice chairman of the committee.

Additional announcements regarding specific details on the two new companies, including financial structures, management teams and a more detailed timetable for the process, are forthcoming.

In connection with the proposed transaction, Viacom intends to file a registration statement on Form S-4 with the U.S. Securities and Exchange Commission. Investors and security holders are urged to read the registration statement and related materials that are filed with the SEC when they become available, because they will contain important information about the proposed transaction. Investors and security holders will be able to obtain copies of these documents, and other documents containing information about Viacom, without charge, at the SEC's website at www.sec.gov.

The new Viacom and CBS will have highly complementary business portfolios, leadership positions in their industries and superior management teams that have direct incentives to create greater shareholder value, said Sumner Redstone. In addition, each company will have distinct capital structures designed to generate higher returns.

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, he added. We anticipate that this companys 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 Viacoms significant cash flow generation will provide the opportunity for significant share repurchases.

He continued, 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.

Viacom (www.viacom.com) 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, Paramount Parks and Simon & Schuster.

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