NEW YORK -- In his wildest music video dreams, Tom Freston never imagined the marketing slogan "I want my MTV" would have such broad implications.

Transforming MTV into a pop culture cable TV empire was merely a warm-up to mining an explosion of branded content for interactive-crazed consumers and advertisers that is Freston's top priority as president and CEO of the new Viacom, the slimmed-down company retaining the name of its predecessor following the split-up of Viacom-CBS Corp. come Jan. 1.

The new Viacom's cache of recent broadband offerings dubbed MTV Overdrive, TurboNick and Comedy Central's Motherload are in sync with the company's younger core constituents, who are growing up digital and leading the consumer-empowered media revolution. Keeping up with the tech savvy, fickle crowd will be a challenge, even for the MTV Networks' creative brain trust, despite their stellar track record of keeping tabs on the pulse of pop culture.

The MTV Networks brands, in all their new-media permutations, are destined to be the growth engines of the new Viacom, but the rejuvenation of the Paramount Pictures film studio is likely to command as much of Freston's time and energy in the near term. That task is sure to be aided by Paramount's $1.6 billion cash and debt acquisition of the live-action unit of DreamWorks SKG, unveiled Monday.

"This accelerates the turnaround of Paramount and overnight makes a key contribution to new Viacom's revenues and earnings growth story," Freston told reporters this week. Retaining the international distribution rights to DreamWorks' live-action library (which it plans to sell for more than $850 million to defray the deal cost) and distribution of DreamWorks' animated films will be a source of perpetual free cash flow. The icing on the deal is a pact with DreamWorks principals Steven Spielberg and David Geffen to produce six nonexclusive films per year.

While it would have taken Paramount more than two years to turn around its fortunes, Freston's swift maneuvering with Messrs. Geffen, Spielberg and Jeffrey Katzenberg captures the most important operational and strategic benefits from DreamWorks while reducing Paramount's capital investment.

The deal exemplifies Freston's adept deal-making and belief that the name of the game for the new Viacom is content, whether it's Mae West and W.C. Fields film classics from the Paramount vault or the lithe young things of MTV's latest hit, "Laguna Beach." The 59-year-old music aficionado who helped launch MTV, and by extension the multichannel TV revolution, now finds himself invigorated by the rush of changing technology that is transforming media and entertainment.

"It's really so fantastic. The audience has been leading this life we have been baiting them with for 25 years with more fragmented media," Freston says. "They are into multicasting, and now they are having more and more control over what they want to do. So they are driving the process. Simultaneously, the advertisers, because of the technology, are able to be much more creative and efficient about what they can do. We can be much more accountable to advertisers and can sell to them on that basis."

The cable networks that wrote the rule book on targeting niche markets are setting a new pace for exploiting the power of the MTV, VH1, Nickelodeon, Comedy Central and Paramount Pictures brands in new places -- from ringtones and cell phone features to integrating video clips in e-mails and compiling electronic scrapbooks.

"Content providers are like arms dealers today," Freston says. "We can sell pieces of what we do to a lot of places. We don't want to impinge on the integrity of the 24-hour cable service where it all starts."

During a recent interview in his office overlooking the bright lights of Broadway, Freston noted that wireless and broadband platforms "are a profitable business for us and the fastest-growing part of our portfolio. There are all kinds of new things we could do to add functionality in the area of video gaming, social networking and a more ambitious digital music service," he says. (In fact, Viacom and Microsoft on Tuesday unveiled a new music service dubbed Urge, integrating Microsoft's Windows Media Player with MTV Networks' music brands.)

Then, again, some things never change, which is why the new Viacom quickly renewed and won its bid for DreamWorks, which analysts speculate could one day also encompass publicly traded DreamWorks Animation.

The fact that Sumner Redstone, chairman and controlling shareholder of the new Viacom and the new CBS Corp., sanctioned the DreamWorks buy means that he views it as a potential boost to the stock, which analysts say could trade postsplit as high as $48 per share. This week, the Viacom board of directors also approved a $3 billion stock buyback by the new Viacom.

Digital boom

Freston's confidence also is buttressed by the fact that MTV Networks' new-media ventures generate $500 million of the new Viacom's more than $8 billion in annual revenue, with more than $100 million coming from global wireless services. Its new digital businesses are growing at better than 50% annually compared with the overall 14% annual growth of the new Viacom's core businesses, Freston says. MTV Networks has 112 global channels (20 of which were launched outside the U.S. this year) and 95 Web sites, and broadband services operating in 160 countries and serving 430 million households. It also has 50 wireless alliances serving 700 million wireless users. Online revenue is headed toward $500 million a year worldwide. And that's just the beginning, Freston says.

"It has the potential to become a very high margin business because, in many cases, you are using the content you already have on television, and you also have television to drive traffic," he says. "As great as Yahoo! and AOL are, they can't present the integrated multimedia experience."

Freston's to-do list includes filling in two other missing essentials: a social networking framework for the new Viacom's boundless branded platforms, and a strong video games component to give the company a bigger hand in the industry's fastest-growing sector -- which depends on the same young demographics.

The fast track to a stake in video gaming might be a closer alliance with Midway Games, a major video game producer and distributor also 88% controlled by Redstone and his National Amusements holding company. Wall Street speculation is that Midway could go private and then more closely align -- or even merge -- with the new Viacom next year.

Such a move would reset the new Viacom's piecemeal video games strategy, now supported by profitable licensing arrangements with all the top video game manufacturers, the recent acquisition of GameTrailer.com and the creation and sale of its own video games on platforms such as Nick.com and Yahoo! The new Viacom takes in more than $100 million annually from video game licensing fees and advertising-related revenue, sources say.

"It clearly is an area of great interest to us," Freston says. "Any time people in our demos are spending a great deal of time with something, we're interested."

In many ways, a social networking framework can be just as critical in providing the new Viacom with the glue that binds together everything -- all of the content, communications, commerce and other services that allow consumers, advertisers, producers and distributors to digitally feed off each other in innovative and lucrative ways.

"Anyone engaged in the demographics we are in has to be involved in some way with social networking that is intertwined in all online usage and content. It gives everybody their own channel," Freston says. "The way it gets monetized will be trickier because it's like inserting the advertising into a conversation between two people, and there are still a lot of questions about advertisers supporting user-created content. It's going to be a low (ad rate) advertising business. But there are a lot of possibilities."

Viacom suffered a setback when it recently lost bids for powerful social Web sites like MySpace.com to News Corp., which now has the online firepower to siphon MTV Networks' core demographics. Freston insists future global cable and wireless acquisitions will be smaller, "tuck-in" properties with content enhancing "capabilities," such as NeoPets.com, where Nickelodeon-age users adopt and care for virtual pets, and the short-form video provider iFilms.

With an initial market cap as high a $45 billion, anticipated first-year free cash flow of $1.7 billion and only about $5 billion in debt, the new Viacom will have the financial might to buy or build what it wants, analysts say.

Veteran Morgan Stanley analyst Richard Bilotti estimates that the new Viacom could spend more than $5 billion next year on a series of smaller Internet, digital and traditional cable network acquisitions. He also expects the new Viacom to allocate about 40% of the estimated $8.2 billion in free cash flow it will generate through 2009. Total contributions from acquisitions could top $800 million, or 15% of the new Viacom's overall earnings before interest and taxes by the end of the decade, Bilotti wrote.

'Raining money'

During the next four years, Bernstein Research analyst Michael Nathanson estimates new Viacom revenue will grow an average of nearly 7% annually to about $14 billion in 2010, with operating income growing by more than 9% annually to at least $4 billion.

That largely will be fueled by cable network revenue growing an average annual 8% (based on average annual 9% growth in advertising and 6.5% growth in long-term cable network affiliate fees). The company's cable networks will account for more than 90% of new Viacom earnings while contributing only about 70% of total revenue, analysts say.

"Our television business is still growing quickly by double digits. Digital is booming and it's raining money, and it's going to rain money for 20 years," Freston says. "But it's been raining money for the last 20 years in cable. Everyone talks about our young demographics and how much new media they use, but last year their TV viewing went up 5%, according to Nielsen. So they are still big consumers of the more traditional media that is our great hit-making machinery."

Entertainment revenue will grow an annual average of 4%, driven largely by home video sales, since about 50% of its film library and 85% of its TV library are yet to be released.

Freston has told investors that he expects the new Viacom to do even better than that: sustainable double-digit growth in revenue, earnings per share and free cash flow, with most digital and other new-media revenue falling straight to the bottom line. So far this year, the new Viacom has grown overall revenue and operating income by more than 26%.

Even so, Freston says the new Viacom will begin 2006 with a streamlining of costs by a factor of from 10%-20% that will include a vastly reduced corporate overhead and the elimination of overlapping Paramount and DreamWorks operations, which will be reflected in one-time charges.

"We're looking very closely at a much leaner corporate overhead. I want this to be a nimble, fast-moving company. I don't need a super corporate structure," he says. "I want to empower the divisions and decentralize."

Even before it rolls out a variety of new advertising applications next year including electronic transactions, Viacom's new broadband service advertising is increasing geometrically every month, while annual online advertising revenue is pushing $100 million.

Since the launch of MTV Overdrive in April, the broadband service is commanding unit prices "that are three to four times what we get on cable," Freston says. "The reason is, they get total exclusivity there. There is no pod of commercials. Directing targeted consumers to Web sites where they get a lot more information about their products is an unbelievable advantage that we build into our price to advertisers."

Unlike most rivals, MTV Networks has been building business outside the U.S. aggressively for more than a decade and views international sales (along with digital broadband) as its biggest growth opportunity.

The new Viacom will continue to invest heavily in new content development, particularly in foreign-language program services in such audience high-growth regions as South Asia, China, Russia and South Korea. That will require closer creative and economic ties with local producers abroad, sometimes in challenging emerging markets. MTV Networks' 24-hour operations in China have finally become profitable after a decade. But the financial returns on investment can be steep and steady.

"I think we'll have the largest global footprint of any content provider in the wireless digital space. This is the area of greatest growth in our company and the area of greatest focus," Freston says.

Analysts predict the new Viacom's robust stable of cable networks will nearly double its intake by decade's end to $10 billion in revenue and more than $4 billion in operating income -- the lion's share of the company's ledger. Nickelodeon alone will generate more than $900 million in cash flow for Viacom this year, which is more than MTV and almost as much as ESPN. On the other hand, having lost 40% of its boxoffice proceeds, Paramount Pictures' revenue was projected to grow a modest 4%, yielding $435 million in profits by 2010. DreamWorks has an estimated $100 million in annual earnings, mostly from distribution pacts.

Relying on the experience of former Warner Bros. chairman Bob Daly as an outside adviser and Paramount Pictures chairman Brad Grey to create a new studio blueprint, Paramount will more aggressively budget and expand international business; elevate MTV Networks, Nickelodeon and BET to film labels whose movies can be more closely tired to its cable and broadband products; and throttle up its library DVD distribution to higher price points than its studio rivals and in conjunction with major advertisers.

In the past two years, Paramount's domestic boxoffice revenue declined from nearly $1 billion to less than $650 million as a result of boxoffice misses and a lack of fully playing the DVD cycle.

Some analysts contend there also is an underlying vulnerability in the cable networks, which have seen a gradual decline in their consistent double-digit top-line growth and a slight decline in operating margins to just more than 40%.

Meanwhile, wireless cell phones and other emerging digital broadband platforms offer an even more lucrative model that pays on a per-subscriber basis for usage that, over time, will help to balance the scales as evidenced by the new Viacom's arrangements with Verizon, SBC and Virgin Mobile.

"They want to put an offering in place that is superior to cable or satellite. So they are coming to us and saying, 'We'll take everything,' "Freston says. "These are people who don't have a volume discount right now because they don't have any customers."

Clearly the new Viacom has the marketplace clout to go its own way on its own terms. MTV Networks still does not have deals with Apple's iPod or Sony's PlayStation (which does do business with Paramount). But, it does have a slew of video-on-demand arrangements across most of its brands, some of the most aggressive of which are for its Nickelodeon content, ranging from $2.99-per-episode downloads of such animated hits as "SpongeBob SquarePants" and "Rugrats" to Hasbro's $100 VuGo kids media player. That's a dollar more per download than the Walt Disney Co. and Apple get for download-on-demand episodes of "Desperate Housewives."

The hope is that digital video arrangements will at least track more like the lucrative 50/50 revenue splits for pay-per-view.

"Eventually we will sell commercial-free programs to device or platform distributors, but for now, we remain advertising supported," Freston says.

Freston says he is intrigued by such on-demand concepts as making a rotating pool of 200 pilots or other library product available to cable systems for an annual license fee. Portable video platforms such as PlayStation and iPod also will emerge as a growing revenue generator for the company, he says. That approach in the U.K. has nearly doubled pay TV revenue there to nearly $300 million in five years.

"We're sort of in a test situation now and in talks with everybody. Five years from now, you will see a richer, more proportionate mix in the digital interactive space than there is today," Freston says. "But I'm not counting on our television business going stale. I really believe that as advertisers look to put their money into things that are more engaging and more relevant, our multiplatform play is our unique selling proposition and competitive advantage."

Coming Friday: A look at Leslie Moonves' game plan for the new CBS Corp.