The world’s third largest entertainment conglomerate embraces demerger to unlock its true value by reorganizing its businesses into two separate entities.
Sometimes divorce is better than marriage.When the US-based Viacom, a leading global media company, bought CBS for $35.6 bn in 1999, it was touted as one of the biggest mergers of its kind in the history of American entertainment industry. The merger created an entertainment powerhouse worth $80 bn, making it the second largest media corporation in the world, with properties such as CBS, the largest television group in America; Paramount Pictures, one of the top four American film studios; Simon & Schuster, one of America’s largest publishing houses; Blockbuster, the pre-eminent video rental outlet; cable channels like MTV, Nickelodeon, the Nashville Network and Showtime; a majority interest in Infinity Broadcasting Corporation, the largest radio and outdoor advertising company in America; and popular Internet sites like marketwatch.com; as well as five theme parks. However, just six years into the marriage, and it seems that a divorce alone will help the company survive in a fiercely competitive business environment. Sumner Redstone, Chairman of the Board and Chief Executive Officer, Viacom, recently announced the US conglomerate’s plans to split Viacom’s businesses into two separate entities.
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