INVESTORS MAY GET THE CHANCE TO SAY, “I WANT MY MTV”

After years of imperial acquisitiveness, Sumner Redstone has begun thinking small. Yesterday, Redstone unveiled a plan to split Viacom into two companies. If the move is made—and it’s likely that it will be—you’ll be able to buy stock in MTV or opt for CBS. The scenario would also get the monkey off the back of the 81-year-old Redstone in terms of choosing a successor.

In the post-split world, Co-President Tom Freston’s empire would include MTV, Nickelodeon, Showtime Comedy Central and BET, plus Paramount Pictures, Paramount Television and Simon & Schuster. Redstone’s other lieutenant, Leslie Moonves, would rule over CBS, Infinity and outdoor advertising. Redstone would still be large and in charge, since he owns 12% of the company and controls 70% of the votes.

"It is dramatic," Redstone told the N.Y. Daily News, adding that he’d been pondering the concept “for many, many months.”

Inside sources told The N.Y. Times that Viacom had also considered, but ultimately rejected, the idea of spinning off Infinity into a third company.

Redstone sees Moonves' company—let’s just go ahead and call it CBS—as appealing to conservative investors seeking slower growth and strong cash flow, while Freston's MTV would be alluring to aggressive investors looking for a sexy growth stock.

By splitting in two, Viacom is seeking to increase the value of its long-depressed stock. "There are a lot of frustrated people at the company," an unnamed exec said in the The N.Y. Times this morning. "There are an awful lot of people here whose stock options are underwater." In the N.Y. Daily News, one analyst described Viacom as “the dog of the media space." Ouch.

“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," Redstone explained in a Wednesday release. "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.” The extent and detail of explanation makes the Viacom board’s exploration of the idea seem pretty real, even if it isn't official...yet.

Looks like bigger is no longer better. In this new world, the empire builders are starting to think small. So long, convergence. Say hello to the new paradigm: separate but equal. Has Sir Howard Stringer gotten the memo?