Moonves at the Movies?

I love the movies. Not necessarily in an intense, movie-buff kind of way, but I appreciate going to the multiplex when I can and escaping into whatever latest fantasy world has been concocted for my amusement.

The business world loves the movies, too, and why not? Even in today's ultra-competitive landscape and challenging box-office environment, celluloid still brings in the cash. So, it's not surprising that CBS (NYSE:CBS) is, according to a recent Hollywood Reporter article, studying the possibility of creating a movie division as a new way of capturing growth for its shareholders.

CEO Leslie Moonves laid out his theoretical plans for such an operation. He plans to keep budgets relatively tame, falling in the range between $20 million and $50 million. He specifically said that he is not looking to fund a project as expensive as something like Time Warner's (NYSE:TWX) upcoming Superman Returns extravaganza.

Movies can form the cornerstone of a media company. I see the logic. After all, CBS owns a major network. Stating the obvious, Moonves could easily port the CBS-made pictures to that asset, thus implementing a nice bit of synergy. He could nurture franchises, which would in turn drive the company's consumer products division, Internet properties, and cable network segment. Lucking upon a few hits would definitely amplify the cash flow potential of the company. It's no different a situation than one might find at Disney (NYSE:DIS) or News Corp. (NYSE:NWS).

But, I have to ask: Didn't Sumner Redstone essentially tell us that synergy is dead?

Sure, he did. Remember the old Viacom conglomerate? It was split in two, yielding the aforementioned CBS as a separate entity, as well as the new Viacom (NYSE:VIA) company. We were told that dividing the old media behemoth made sense since the shares didn't seem to reflect the true intrinsic value of said behemoth.

Fine. In fact, there might have been something to that argument. All those egos and territorial disputes probably prevented pure synergy from taking place -- maybe it would be better to have one concern control the CBS network, the radio stations, the UPN channel, etc., and one concern responsible for the MTV brands, the Nickelodeon platform, and the Paramount Pictures studio.

That's right -- Paramount is embedded within Viacom. And Paramount makes movies. Does this strike anyone else as strange -- maybe even, in an academic sense, hypocritical? Heck, the company even acquired the DreamWorks SKG live-action brand, so it's fully represented in the Hollywood vanguard. So my question goes like this: Should Moonves be fooling around in the movie business, given the old Viacom's stance on synergy?

Personally, I think CBS should let Viacom hang out in Hollywood. Besides, CBS is, for obvious reasons, entrenched in the Hollywood industry itself. We were told that a split was sensible and that smaller is better. We were assured that separate corporate siblings were better than one giant Siamese twin, with the sister entities attached at the same bureaucratic organ. Now CBS wants to invade Paramount's turf?

All I can say is that I hope Moonves does stay away from Superman-type budgets so that his shareholders see as little risk as possible (it should be noted that he does plan on utilizing private equity financing as an additional risk manager). He probably should just stick to making TV movies instead of programming celluloid for the multiplexes. Again, this would seem to be the kind of complexity that the split was trying to erase from existence. If I owned CBS, I'd be scratching my head right about now...

Further Foolish reading:

• Box-Office Blues Banished
• Viacom Strikes Out on Its Own
• Viacom Cuts Both Ways

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Fool contributor Steven Mallas owns shares of Disney. He also is a fan of synergy and has no problem with it, but he just doesn't understand this move. The Fool has a disclosure policy.