There’s no doubt many at Viacom now see the long, decrepit arm of Sumner Redstone reaching out from his Beverley Hills estate and reasserting his grip on the cable properties that were once buried deep within his corporate behemoth.

At the time of the CBS / Viacom split, I knew Viacom would trade at a price that would keep it well off my investment radar. If anything, I thought CBS would be the more likely opportunity. Right now, I’m not tempted in the least by either stock. But, I have found myself much more interested in Viacom as a business.

The one really exciting aspect of the CBS / Viacom split was the idea that an MTV native would be running the new company. Viacom’s properties are very different from those owned by CBS. There was (and still is) an opportunity here for Viacom to become a content focused company.

CBS really isn’t content focused – and it shouldn’t be. That company’s biggest competitive advantage is owning a U.S. TV network. There are only a handful of such networks and each is a franchise (albeit a waning one).

Simply controlling a network, regardless of the quality of its current programming, has value. The situation is analogous to owning a Major League Baseball team, which has some value regardless of the quality of the players currently under contact.

Broadcast networks are in a very different position from cable properties, where excluding a handful of properties (e.g., ESPN, Discovery, and the Food Network) competitors have no real advantage in attracting good programming. Many large media companies are built around delivery (though they have managed to delude themselves into thinking otherwise).

Content and delivery are two very different businesses that owe their marriage more to the egos of media moguls and the capital of the investors who buy their securities (both equity and debt) rather than to any natural economic synergy.

The origin of good content is always a choke point; the delivery of such content almost never is. It takes only two competing buyers to make a market. I’ve never been convinced that serving thousands of small customers is really a safer and more profitable business than serving a few big ones (except in high volume, low margin businesses where a large customer playing hardball can force you to eat your unused capacity). In cases where the product is unique and the right to use that product is exclusive (as is often the case in the media business), the number of different owners of the various delivery systems becomes an unimportant point.

The broadcast networks are an exception – a living relic of a bygone era. They have a competitive advantage that isn’t derived solely from controlling content. They have an established network, which acts much like a large installed base by providing a beachhead of access and familiarity from which an offensive of solid programming can be launched into millions of American homes.

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