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Viacom Ready for Spin Move

Investors await split-up news from Thursday's shareholder meeting.
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investors continue to expect more from Les.

Les in this case is Leslie Moonves, the well-regarded CBS executive who is expected to lead the broadcast half of Viacom when it splits into two companies. Progress on that front could be on tap at Thursday's annual shareholder meeting in New York. The meeting will set the stage for a June board vote on Chairman Sumner Redstone's proposal.

Wall Street will also be on the lookout in coming months for some smaller asset sales, possibly involving the New York media titan's theme park and publishing units.

Redstone's planned split-up, unveiled two months ago, aims to stimulate the company's long-stagnant stock. Word of the possible split sent Viacom shares higher briefly before they retreated to the mid-$30s. On Tuesday, Viacom was off its 52-week high of $39.26, trading at $35.40.

Larry Haverty of Gabelli Asset Management says the move to separate Viacom into a growth-focused cable business and a value-focused TV and radio operation "is a case where one plus one is greater than two." Haverty cites the vast Paramount film library and Moonves' stewardship of CBS Broadcasting as key strengths. Gabelli Asset Management owns shares in Viacom.

Haverty points to Paramount's work with gaming company

Take-Two Interactive Software


on a video game called

The Warriors

, based on a 1970s movie and planned for release on PlayStation 2 and Xbox later this year. He cites the advantage of Paramount's large library, which means no residuals owed on the original film.

But beyond the inevitable talk of unleashed synergies, there's some speculation that the less-hyped value side -- led by Moonves' CBS, Infinity and Viacom Outdoor -- could keep stride with the growth side, which is expected to comprise the Paramount movie studio, MTV Networks and other cable assets.

To be sure, the Paramount-MTV Networks operation, run by Tom Freston is a juggernaut. The group continues to test emerging technologies and capitalize on new media growth. Haverty also singles out



decision to promote its new Xbox gaming console on MTV earlier this month as an illustration of the growth unit's potential.

That said, Moonves is credited with having taken CBS to the top of the ratings game with a steady stream of hits. In the company's recent upfront presentation, there was ample evidence that the network will continue to thrive in the near future.

Even if Wall Street's spotlight will shine brightly on the MTV and Paramount growth side of the business, one Viacom insider, speaking at the CBS upfront presentation last week, said he "wouldn't bet against the value side of the business."

At the same event, Moonves extolled the virtues of network television's audience reach, which has faced a significant threat from targeted cable programming. It's that type of programming, in fact, that sister division MTV Networks produces with much success. Ever the wit, Moonves suggested to the assembled crowd of Madison Avenue ad buyers that they buy CBS's shows, "but if you need to buy cable may we politely suggest you buy MTV Networks."

In the meantime, the banking process is being led by Lazard and a consortium of other investment banks. Famed Lazard banker Bruce Wasserstein is expected to take a leading role in the process, which could lead to some smaller strategic divestitures in the near future.

Viacom is already auctioning off Famous Players, a Canadian movie theater chain that is comprised of 856 screens in 104 locations. It is looking for about $500 million for those assets. It will also consider selling publishing unit Simon & Schuster along with its five Paramount theme parks, which fall under the umbrella of its entertainment division, if the price is right. Both are solid businesses, but the moves would help trim the fat.

A Viacom spokesman says only that Viacom is "currently not in talks" to sell either of those assets.