In a statement released late yesterday, Viacom Chairman/CEO Sumner Redstone revealed that he and his company's Board of Directors were exploring the division of its business into separate publicly-traded companies.

Specifically, Redstone was suggesting one company would include radio, TV and outdoor divisions run by current Viacom Co-President/Co-COO Les Moonves, while the other company would include the MTV Networks ad Paramount divisions and be led by the company's other Co-President/Co-COO, Tom Freston.

Commenting on this possibility, Redstone remarked, "Viacom has an outstanding stable of assets with leadership positions and excellent future prospects and I have for several months been considering various alternatives to maximize our business opportunities in a way that would best serve our shareholders.  It is clear that, despite our success in operating our businesses for maximum return, Viacom’s businesses have inherently different growth characteristics and investment attributes that appeal to different types of investors.  Furthermore, it has also become clear that this important distinction is likely to continue to limit Viacom’s ability to receive full value for its assets and its prospects in the investment community.

“We believe that a separation of our businesses into distinct and strong operating entities would allow us to optimize our capital structure and create unique investments that are more appealing to investors with different objectives,” Redstone added.  “Separately, these new publicly-traded entities could each pursue strategic paths that would maximize their long-term potential.  The separation could highlight high-growth businesses, such as our MTV Networks, which would be operated by Tom Freston, and could give us added flexibility to pursue internal growth and to enhance these operations through the creation of an attractive high-multiple currency that could be used for accretive acquisitions.  Additionally, we believe the separation is likely to allow us to deliver greater value to our shareholders through a company operated by Les Moonves that would combine our leading CBS broadcast television businesses with our growing outdoor business and our high free cash flow operations, such as radio.  This group of assets would also have the potential to participate in a program of stock buybacks and increased dividends." 

“The transaction, Redstone concluded, "would further the logical and orderly succession process that we put in place and would allow Viacom and its shareholders to take full advantage of the skills and experience of our deep management.  The transaction should also enable us to retain the best people for each business and would provide incentives for the creation of shareholder value that are more closely tied to the businesses they run.”

Don't look for any official action on this possibility until the second quarter.