If you recall, the "old" Viacom split itself into two back in January, becoming CBS
Indeed, fellow Fool Alyce Lomax thinks that CBS's newfound independence exposes a number of challenges ahead that were obscured when it was a Viacom component. But CBS's pain should be the new Viacom's gain, leaving the conglomerate with higher-margin cable network channels such as MTV, Nickelodeon, and Comedy Central, just to name a few. These channels account for nearly 70% of Viacom's total revenue. There's also the storied Paramount Pictures and the recently acquired DreamWorks SKG, to name a few other major entertainment brands. The entertainment segment accounts for about 30% of total company revenue.
Strangely enough, since the separation, CBS' stock has performed much better than Viacom's. Fortunately for Viacom, the market seemed to be pleasantly surprised by its second-quarter results, as its cable advertising revenue came in ahead of the Street's expectations. It's also encouraging that management stuck by its full-year guidance. Overall, the solid results could be the first indication that the smaller and nimbler Viacom is starting to excel in a changing entertainment landscape. Sumner Redstone is probably breathing the biggest sigh of relief; he's Viacom's head honcho and primary shareholder.
The new Viacom's programming can be distributed through virtually any type of media, be it television, the Internet, radio, or satellite. And geography is no longer a boundary; Viacom already has a global footprint, but management intends to further emphasize international expansion for a good portion of future growth. The company is still quite dependent on advertising (it accounted for about 40% of revenue last year), but at least it can focus on growing and acquiring its way into the areas where advertisers are moving to chase consumers, cyberspace included. In addition, Viacom still has some opportunity at Paramount Pictures, if the studio can successfully rebound after flops like Mission: Impossible 3.
Overall, it looks like "new" is starting to pay off for Viacom.
For related Foolishness:
Fool contributor Ryan Fuhrmann is long shares of Blockbuster but has no financial interest in any other company mentioned. The Fool has an ironclad disclosure policy. Feel free to email Ryan with feedback or to discuss any companies mentioned further.