Viacom joins the urge to demerge

The days of the sprawling media conglomerate could be over as Viacom, the world's third largest, officially split in two yesterday.

The new Viacom and CBS Corporation began trading on Wall Street as separate entities, with shares in both moving higher early on.

CBS includes the television network, radio and outdoor advertising while Viacom has kept the cable channels including MTV and Nickelodeon, and the Paramount film studio.

Sumner Redstone, who built Viacom, told the cable news channel CNBC that "synergy" if not dead as an idea was certainly in its "death throes".

For years, media groups collected assets driven by a belief in benefits from sharing content and selling advertising across businesses. That proved ill founded. Bundling assets with various growth rates together has tended to depress the conglomerates' share prices.

Analysts will be watching the performance of Viacom and CBS shares closely to determine whether there will be further downsizing in the industry.

Some other break-ups have been announced. Clear Channel, the largest radio owner in the United States, revealed plans for an initial public offering of its outdoor advertising business and the spin-off of its entertainment unit, which owns almost 30 venues in Britain including the Sheffield Arena. Liberty Media is spinning off the Discovery cable business.

Viacom has been presented to investors as the higher growth company. CBS includes Simon & Schuster publishing and Paramount theme parks.