The main logic behind the split up is that sprawling conglomerates become dragged down by their own size and that expected synergies often do not occur because of management struggles or clashes of corporate cultures (see chapter 11, pages 233-235 of Media Economics, Theory and Practice for a great example of this).
This article focuses on CBS’s measures to assure investors that it is prepared for the new digital age and will remain profitable even as the ways in which consumers consume media radically change. The broadcast network is focused on creating new revenue streams from video-on-demand, internet sites/portals, and more diverse program offerings on other channels that are not dependent on advertising (except in the internet case) and are more amenable to consumers’ new tendency to watch TV when and where they desire. Part of the problem that traditional broadcast networks have been having is that their content is regarded as having a different value for cable carriers than those stations that exist exclusively on their medium. This weakens broadcast newtorks’ bargaining position, for they are not regarded as having the same economic structure. In some senses, CBS (along with all other major networks) is seeking to change that by reconstructing its business model.
“The shows will cost 99 cents each, and will be available in areas where CBS owns TV stations and Comcast provides digital cable. The deal bears some similarity to recent agreements NBC and ABC have struck with DirecTV and Apple Computer. All are meant to adapt the business model of a broadcast television network to changing technologies and viewer habits, and find additional ways to be paid, beyond the advertising that has been broadcasting's sole source of revenue."
"But unlike NBC and ABC, which reside inside the conglomerates General Electric and Walt Disney and have sizable cable network siblings, CBS has an extra incentive behind its digital hustle: the split-up of Viacom. The breakup will leave the CBS Television Network as the centerpiece of a new CBS Corporation, which will include 40 television stations, the UPN network, the radio group Infinity Broadcasting, Showtime, Simon & Schuster and the Paramount Television production business. The rest of the company, which includes the fast-growing MTV Networks cable channels, BET and the Paramount Pictures film studio, will continue under the Viacom name.”