Viacom mulls splitting into two companies

Frustrated with a languishing stock price, media conglomerate Viacom Inc announced late on Wednesday that it is considering a plan to split into two companies to allow investors to value its businesses separately.

A breakup of the New York-based media company, whose properties include CBS, MTV, VH1 and the Paramount movie studio, would also solve the question of who would succeed Sumner Redstone as CEO. The company said it would provide more details on its plans in the second quarter.

Confirming a report on The Wall Street Journal's Web site, Viacom said late on Wednesday it was exploring a plan that would split the company into two separate entities: One anchored by its fast-growing cable networks such as MTV, led by longtime MTV chief Tom Freston; and another built around the broadcast television businesses that would be run by CBS head Les Moonves.

Freston and Moonves have been contending for the top job at Viacom since last June, when chief operating officer Mel Karmazin left in a power struggle and triggered the two-way race.

Under the breakup plan being considered, the broadcast television company would also include Viacom's radio businesses, which remain profitable but have fallen out of favor with investors due to poor growth prospects and increasing competition from portable music players like Apple Computer Inc's iPods.

Last fall, Viacom also separated itself from Blockbuster Inc, its video rental unit that had also fallen out of favor with investors due to heavy competition from cheap DVD sales from Wal-Mart Stores and DVD rent-by-mail services.

Redstone said in a statement that despite the company's efforts to drive its various businesses for the best possible returns, those businesses "have inherently different growth characteristics and investment attributes that appeal to different types of investors."