New York -- Viacom Inc. chairman Sumner Redstone told the audience at the media giant’s annual shareholders’ meeting here Thursday that the decision on whether or not to split the company into two separate publicly traded operating units will be made by the end of June.
Viacom proposed splitting the company into two units -- one headed by co-chief operating officer Tom Freston and including its growth assets (cable channels and the Paramount Pictures movie studio) and one headed by co-COO Les Moonves and including its more stable properties (CBS, Showtime Networks Inc., Infinity Broadcasting Corp. and Infinity Outdoor) -- in March.
Redstone said that if the board approves the split, it would be completed by the first quarter of 2006.
At the annual meeting, Redstone reiterated that the split is an effort to boost Viacom’s stagnant stock price.
The company’s shares -- which closed Thursday up 9 cents to $35.34 apiece -- have declined about 5% since the beginning of the year. However, the stock is down considerably from the mid- to high-$40 trading range it enjoyed in 2003.
“We are as frustrated as you are by the disconnect between our operations and the price of the stock,” Redstone said. “Since we announced the possibility of splitting, our stock is up significantly, and all we said is that we’re considering it. We have high hopes that we sill see an increase in the stock price [after the split].”
Later, in response to a shareholder’s question, Redstone virtually guaranteed that Viacom’s stock price will be up next year. “A year from now, the stock will be higher,” he said.
While many of the shareholder questions revolved around proposed pay cuts for employees at CBS News Radio, there was one moment of levity when a young boy -- a shareholder who appeared to be about 10 years old -- stepped up to the mike.
The shareholder, who was at just his second annual meeting, said that at the 2004 gathering, when Redstone was asked about his relationship with former COO Mel Karmazin, he said everything was “OK.” Since Karmazin resigned last year, less than one month after the meeting, the young shareholder asked whether things were still OK with current management.
“Everything was OK,” Redstone said regarding his relationship with Karmazin, “but only OK. We wanted the world to be better. I think that with Tom and Les, the world is better.”