To mark Viacom's official split into two companies this morning, several of the company's top executives were on the New York Stock Exchange floor this morning to ring the opening bell: (From l.) CBS Corp. President-CEO Leslie Moonves; Viacom Chairman Sumner Redstone; John Thain, NYSE CEO, and Tom Freston, President-CEO of Viacom.
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As Mr. Chaffin notes, John Malone has made similar moves with his Liberty Media holdings since Mr. Redstone last March said he was going to split Viacom. And poor Richard Parsons -- well-liked though he is as CEO of Time Warner -- has had to contend with the ugly words of Carl Icahn, an activist investor agitating for a break up of the world’s largest media conglomerate. Mr. Icahn would like to see Time Warner split into four divisions, roughly consisting of AOL, cable TV, publishing and movies.
Back at the newly independent CBS Corp., Mr. Moonves has been busy positioning his half of Viacom -- labeled by Mr. Redstone as the slow-growth stock for its holdings in radio and outdoor -- as a cutting-edge digital player with deals to sell prime-time programming for downloading to iPods and to deliver its news reports just about anyway consumers want to get them. He has even gone out and bought a cable channel, College Sports Television, which flies in the face of one of the reasons Mr. Redstone gave for the split, which was to allow the Viacom cable divisions to grow unencumbered by the more mature businesses of broadcast TV, radio and outdoor. Prudential Equity Group today said it was starting its coverage of the two new companies by giving the new fast-growth Viacom a “neutral” rating and a target price of $42, while slow growth CBS was given an “overweight” rating and a target price of $30 with “compelling valuation.”
As Mr. Chaffin writes, “Ultimately, the wisdom of the split may be judged on how it positions the companies to grapple with the revolution in digital distribution that is poised to transform the broader media industry in the same way that it has already reshaped the music business.”
Whether splitting the companies is good for anything other than those who own the stock is still very much in debate. Mr. Parsons, with his deal now sealed with Google to remain AOL’s search partner, has indicated quite strongly he believes the company is on the right path by staying together. And given Microsoft’s disappointment at being shut out of AOL’s rich content in its own failed attempt to partner with AOL for search, it seems to be a pretty good indicator that some caught up in the debate over the future of media conglomerates believe that companies that own content-producing entities are better poised to finally take advantage of digital convergence.