Viacom said the split will occur in the first quarter of 2006. Viacom CEO Sumner Redstone will be chairman and controlling shareholder of the companies, which will both be based in New York.
The company said the separation will be made through a tax-free spin-off, meaning that holders of Viacom shares will receive shares of a new company called CBS Corp., which will include the CBS and UPN networks, a group of TV stations as well as a major radio and outdoor advertising group.
The new CBS company will be led by Les Moonves, the current head of CBS and co-president of Viacom. To be called the CBS Corporation, it will combine the CBS and UPN broadcast networks, Viacom Television Stations Group, Infinity Broadcasting, Viacom Outdoor, as well as Showtime, Simon & Schuster and Paramount Parks. CBSNews.com will also fall under the CBS Corporation umbrella.
The other company, which will retain the Viacom name, will include MTV, VH1, Nickelodeon, BET and several other cable networks as well as the Paramount movie studio. That company will be led by Tom Freston, the longtime chief of MTV and a co-president of Viacom.
"The decision to create two new companies was the result of intense study by the board, which worked closely with the company's management and carefully analyzed all strategic options before reaching its conclusion," Redstone said in a statement released by the company.
Redstone added that the Board has formed a special committee, which he will chair, that will assist and monitor the process of creating the two companies.
Viacom had announced in March that it was considering a plan to split itself into two companies, saying it wanted to allow investors to value its array of companies separately.