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REPORT: VIACOM BOARD TO VOTE ON COMPANY SPLIT IN MAY

Spinoff Could Take Place in Early ’06,
Reuters Reports
Viacom Co-President/Co-COO Tom Freston says the company’s board of directors is scheduled to consider splitting the media giant into two separately listed companies in early May, according to a Reuters report.

The idea, most recently floated by Chairman Sumner Redstone in Viacom’s first quarter earnings report this week (see story), involves dividing the company’s assets into a high-growth unit (MTV Networks, Paramount) and another consisting of the more mature businesses (CBS, Infinity). Freston would helm the former company, while his counterpart Les Moonves would run the latter.

"At the May 3 board meeting we will present the case very thoroughly," Freston told Reuters in an interview in Johannesburg, where he was promoting MTV’s 100th channel, MTV Base. "There is a very good probability that the board will approve it in May, either at that board meeting or at another scheduled for later in the month."

Freston further told Reuters, “I expect double-digit growth for revenues and the bottom line from the first year," he said. "But it is important that to continue double-digit growth we pursue growth in new areas.” Freston is said to already be considering acquisitions, including an Indian cable network, and says that a new, standalone MTV/Paramount company would generate cash flow of a couple of billion dollars a year.

He also noted that a decision to split up Viacom would give investors two distinct options, each better than the current company as a whole now. "Viacom is neither fish nor foul as far as investors are concerned,” he told Reuters. “We don't utilize the synergies, and the stock hasn't gone anywhere. After the split, we will have two solid companies."

It’s been a good year for Freston, who, along with Moonves, earned $20 million in salary and bonuses in 2004, only slightly less than Redstone’s $21.5 million. Each was also awarded stock options worth around $30 million, though the options are said to currently be underwater by around $1.50 each.
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