Viacom Inc. chairman Sumner Redstone made it official: He will step down as CEO after the company splits into two separate operating units next year, relinquishing those roles to co-chief operating officers Tom Freston and Les Moonves.
Viacom’s board of directors approved the split earlier this year that will cleave the company into a high-growth unit (consisting of MTV Networks and the Paramount film studio) and one consisting of its more mature assets (CBS, Infinity Radio, Infinity Outdoor Advertising, Showtime Networks Inc., theme parks and its Simon & Schuster Inc. publishing unit).
The cable unit will be headed by Freston. Moonves will head up the broadcasting unit.
There had been some doubt as to whether Redstone would give up the CEO title. During a conference call with analysts to discuss second-quarter results Thursday, Redstone clarified things.
“There is no doubt that each company will have a strong management team with a proven record of success. Tom Freston will be the CEO of the new Viacom, and Leslie Moonves will be the CEO of CBS Corp.,” Redstone said on the call.
He’ll continue as chairman and controlling shareholder of both companies.
Viacom stock has languished in the mid-$30s for more than one year. By unlocking the value of its high-growth assets (MTV) and creating a dividend-producing traditional broadcast unit (CBS), the company hopes to attain higher share values.
The move effectively unwinds the merger of CBS Corp. and Viacom, completed in 2000.
Viacom reported mixed results in the second quarter, with revenue up 10% to $5.9 billion, fueled by a 14% rise at the cable networks. Operating income increased 4%, and earnings for the period rose to 47 cents per share from 43 cents a year ago. Viacom’s television unit saw its revenue decline 1% during the period.