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Can Redstone Boost Growth?

Over nearly 18 months, investors have watched as Viacom shares fell about 16%. Meanwhile, the Bloomberg Media Index, comprised of 33 companies, rose 11% in the same period, and the Standard & Poor's 500-stock index was up 28%.


While the company's earnings per share are projected to grow by 19% in 2004, average earnings for 30 other media companies will jump 76%, according to earnings tracker Thomson First Call.


Now, with Freston and Moonves in charge, the creative types may once again be given free reign. If their records are any indication, they'll be pushing the boundaries -- striking deals, launching TV channels, and greenlighting big-budget movies. Starting in 1981, Freston helped build MTV into one of the strongest TV franchises in the world. Moonves worked the same kind of magic on CBS' prime-time offerings as Karmazin once did for shareholders' wallets.


Where should Freston and Moonves look for growth? One quick fix would be to expand Viacom's library of older movies, which number about 1,100, compared to more than 4,000 apiece at MGM and NBC Universal. With the world going digital, Viacom needs more content to take advantage of a growing appetite for DVDs and video-on-demand. Viacom is moving forward with plans to spin off or sell its Blockbuster Entertainment unit, but analysts say it may also makes sense to sell Infinity Broadcasting, the company's biggest problem child.
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