Media Deconsolidation, Part 9: Viacom’s Split

Why are so many media companies breaking up or shedding assets? Well, the answer certainly has something to do with stock price. As this nice piece in yesterday’s (U.K.) Telegraph noted, Viacom alone has lost 36% of its value over the past five years. “We do not control the price of the stock,” says Viacom leader Sumner Redstone, “although we think about it a great deal.” I bet they do now! In fact, we know that declining stock price has led to the split Viacom plans to complete by the end of June. The end result will be two smaller companies, one containing MTV Networks and the Paramount movie studio, the other containing the older media properties (CBS Television, Infinity Broadcasting, Paramount Television, and book publisher Simon & Schuster.)

Declining stock price also haunts many other media giants. TheTelegraph story notes that “This is a common story in the American mediascape; shares in Time Warner, News Corp, Disney, Sony and Comcast are all down or barely changed in price” over the past five years. “And investors aren’t exactly desperate to get back into these stocks while digital technology continues to play havoc with traditional media business models.”

And that’s the real story here. Technological changes and the rapid evolution of the “media market” have caught most of these tradition media operators off guard. In my new book, Media Myths: Making Sense of the Debate over Media Ownership, I walk the reader through these amazing changes that are sweeping across the media landscape and leaving many players struggling to find workable business models for the future.

These stock declines aren’t just happening by chance. Many investors see the writing on the wall and understand that the media landscape continues to evolve at a breakneck pace. As Viacom’s coming split makes clear, not even the largest players are immune from the resulting media marketplace mayhem.

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