CBS » Topics » Agreements Related to the Separation

This excerpt taken from the CBS DEF 14A filed Apr 14, 2006.

Agreements Related to the Separation

              National Amusements, the Company's controlling stockholder, is also the controlling stockholder of New Viacom. In connection with the Separation, New Viacom and CBS Corporation entered into a separation agreement, a tax matters agreement and a transition services agreement. The separation agreement, dated December 19, 2005, effected the Separation and identified assets to be transferred, liabilities to be assumed and obligations of each company following the Separation and included indemnification obligations for such liabilities. In accordance with the terms of the separation agreement, New Viacom paid to the Company in 2005 an estimated special dividend of $5.4 billion. Pursuant to the provisions of the separation agreement, the estimated special dividend is subject to adjustment, and on March 14, 2006, the Company submitted to New Viacom an adjustment to increase the estimated special dividend in the amount of approximately $460 million. The separation agreement also set forth certain agreements between New Viacom and CBS Corporation with respect to the period following the Separation. The tax matters agreement, dated December 30, 2005, sets forth the responsibilities of CBS Corporation and New Viacom with respect to, among other things, liabilities for federal, state, local and foreign income taxes for periods before and including the Separation, the preparation and filing of income tax returns for such periods, disputes with taxing authorities regarding income taxes for such periods and indemnification for income taxes that would become due if the Separation transaction were taxable. Pursuant to the transition services agreement, dated December 30, 2005, each of New Viacom and CBS Corporation provide certain specified services to each other on an interim basis, including the following services: general information systems and technology services, benefits and human resource information systems, uplinking facilities, payroll services, domain name administration, web hosting services and other limited services consistent with past practices for terms ranging from six months to two years.

              The businesses of New Viacom and CBS Corporation currently, and for the foreseeable future, will continue to work together pursuant to a variety of agreements. The Company believes that all such agreements have been negotiated on an arm's length basis between the applicable counterparties. Below is a brief description of certain of these agreements:

      Programming, Retransmission and Affiliation Agreements. New Viacom or its subsidiaries provide or distribute products through arrangements with the Company or its subsidiaries, and vice versa. Such arrangements include the following:

      New Viacom and its subsidiaries on the one hand and the Company and its subsidiaries on the other hand are parties to numerous programming agreements and arrangements pursuant to which each receives programming from or sells programming to the other.

      CBS Broadcasting, a division of the Company, provides retransmission rights that MTV Networks, a division of New Viacom, uses in connection with MTV Networks and BET affiliation deals with certain multi-system operators and satellite distributors.

      Paramount Pictures, a division of New Viacom, continues to license feature films to Showtime Networks, a division of the Company, that are theatrically released through December 2007.

      Paramount Pictures will continue to distribute product of CBS Paramount Television, a division of the Company, in the home entertainment market worldwide for two years following the Separation.

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      Leases and Services Agreements. New Viacom or its subsidiaries provide the Company or its subsidiaries with various services and vice versa. Such arrangements include the following:

      Paramount Pictures and the Company entered into a lease effective as of the Separation pursuant to which Paramount Pictures leases space and facilities on the Paramount Pictures studio lot to the Company.

      New Viacom and its subsidiaries on the one hand and the Company and its subsidiaries on the other hand entered into various subleases pursuant to which each primary tenant provides office and other space to the other, including subleases from New Viacom to the Company for office space at 1515 Broadway, New York, New York and 1633 Broadway, New York, New York.

      License Agreements. New Viacom or its subsidiaries licenses intellectual property rights to the Company or its subsidiaries, and vice versa. Such arrangements include the following:

      Paramount Pictures and the Company, effective as of the Separation, allocated between them rights to a number of properties previously owned by Paramount Pictures which had been used in both the television and theatrical motion picture media. With respect to these cross-over properties, each company which controls the rights to the property licenses to the other exclusive development in the other company's medium (television with respect to the Company and theatrical motion pictures with respect to Paramount Pictures), subject to consent not to be unreasonably withheld. Each company has direct-to-video rights for the properties it controls.

      Paramount Pictures and the Company entered into licenses effective as of the Separation pursuant to which Paramount Pictures licenses the use of the name Paramount and related trademarks to the Company for its use with respect to the television production and sales/distribution operations formerly owned by Paramount Pictures and transferred to the Company in connection with the Separation, until June 30, 2009. Beginning on July 1, 2006, the Company may only use the Paramount name and related trademarks in connection with the CBS name and related trademarks.

      MTV Networks, Paramount Consumer Products and Paramount Parks, a division of the Company, entered into a license effective as of the Separation pursuant to which Paramount Parks continues to use Nickelodeon and related trademarks and certain entertainment properties owned by MTV Networks for four years and continues to use Paramount and related trademarks, and certain entertainment properties owned or controlled by Paramount Pictures for ten years.

      New Viacom and the Company entered into a license effective as of the Separation pursuant to which CBS Outdoor, a division of the Company, may continue to use the Viacom and Viacom Outdoor trademarks in its business for up to six years.

      Simon and Schuster entered into licenses for various intellectual property rights owned by the businesses of New Viacom for use in its publishing products.

      Other Arrangements. Certain businesses of New Viacom place advertisements with the Company or its subsidiaries, and vice versa. In addition, Simon and Schuster sells its products to various businesses of New Viacom.

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              In 2005, the businesses of CBS Corporation recorded total revenues of $173.6 million and total purchases of $154.9 million from transactions with the businesses of New Viacom.

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