MUMBAI: Division for shareholders benefit and further unlocking of value! That is what media conglomerate Viacom chairman and CEO Sumner M. Redstone is looking to achieve this fiscal.
He has announced that he is exploring with the board of directors the possible division of its businesses into separate publicly-traded companies.
Redstone said that Viacom’s Board has authorised the company to explore the separation as a means to achieve important corporate objectives and to better deliver value to shareholders in a tax-efficient manner.
Viacom expects to announce further details regarding the possible separation in the second quarter of the year.
Redstone 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, Viacom’s businesses have inherently different growth characteristics and investment attributes that appeal to different types of investors.
"Furthermore, it has also become clear that this important distinction is likely to continue to limit Viacom’s ability to receive full value for its assets and its prospects in the investment community. We believe that a separation of our businesses into distinct and strong operating entities would allow us to optimise our capital structure and create unique investments that are more appealing to investors with different objectives.”
Redstone avered that the new publicly-traded entities could each pursue strategic paths that would maximise their long-term potential. The separation could highlight high-growth businesses, such as MTV Networks. The first entity would be operated by Viacom co-COO Tom Freston. Redstone maintains that this could give Viacom 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.
Redstone states that separation would allow the company to deliver greater value to shareholders. The second entity would be operated by Viacom co-COO Les Moonves. This would combine CBS broadcast television businesses with the outdoor business and free cash flow operations, such as radio. This group of assets would also have the potential to participate in a programme of stock buybacks and increased dividends Redstone noted.
