The board of Viacom Inc. has unanimously approved the split of the company into two separately traded entities, the entertainment giant said June 14. The split is expected to be completed in the first


NEW YORK (The Hollywood Reporter) -- The board of Viacom Inc. has unanimously approved the split of the company into two separately traded entities, the entertainment giant said June 14. The split is expected to be completed in the first quarter of 2006.

Viacom chairman/CEO Sumner Redstone will serve as chairman and controlling shareholder of both entities, while his daughter, Shari Redstone, has been named non-executive vice chairman. Viacom also named board member Frederic Salerno to the new post of lead independent director.

In a tax-free spin-off, a new company led by Tom Freston will be created. It will retain the Viacom Inc. name. As expected, this entity will include MTV Networks, BET, Paramount Pictures, Paramount Home Entertainment and Famous Music.

The second company, to be called CBS Corp., will be led by Leslie Moonves and include the CBS and UPN networks, the Viacom TV station group, the Infinity Broadcasting radio unit, Viacom Outdoor, the CBS, Paramount and King World TV production operations, as well as Showtime, book publisher Simon & Schuster and Paramount Parks.

While Viacom's statement did not specify their respective titles, Freston and Moonves are expected to be named CEOs of their respective entities shortly, according to sources.

Additional details, such as exact management teams and titles, financial structures and a more detailed timetable for the split, are expected to come out over the next several weeks, Viacom said.

Viacom's board has formed a special committee, chaired by Redstone, which will assist and monitor the process of creating the two firms. Shari Redstone will be vice chair of the committee, and Salerno and board member Philippe Dauman will also serve on it.

In a statement, Sumner Redstone said the split "recognizes the inherent diversity of our assets, as well as the changing business environment."

Redstone also once again touted the focus and strengths of the two new companies.

"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 said. This will attract a higher stock trading multiple, which can be used for targeted acquisitions in promising areas, such as video gaming, online and wireless, he added.

"Additionally, we believe that the new Viacom's significant cash flow generation will provide the opportunity for significant share repurchases," Redstone said.

The new CBS, meanwhile, will be a strong generator of free cash flow. "Importantly, this company will also have the financial capability to return significant capital to stockholders through dividend payments and stock repurchases," Redstone said.

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