The continuing restructuring of Viacom will cost the US-based media giant US$785 million.
The company plans to write down that amount as a pre-tax charge for the first fiscal quarter of 2015. This will reflect costs relating to “underperforming programming, including the abandonment of select acquired titles, as well as costs associated with workforce reductions”.
Staff and programming cuts have been vast since Viacom CEO Philippe Dauman first announced the restructure early this year. Channels including MTV, Nickelodeon and TV Land have been affected by the changes, which are expected to create annual savings of US$350 million, and all its networks have been split into two key groupsunder Doug Herzog and Cyma Zarghami.
A projected US$175 million will be saved in fiscal year 2015, the company added in a press release.
“This strategic realignment, which is largely completed, will allow us to sharpen our focus on driving long-term growth in a rapidly changing industry,” said Dauman. “We will transition rapidly into the future, generate substantial cost savings and continue to increase our investment in original programming to bring our audiences great content in new and groundbreaking ways.”
Restructuring and further strategic acquisitions are likely to cost Viacom US$400 million this year, meaning Viacom will temporarily suspend a US$20 billion stock repurchase “in order to stay within its target leverage ratio”. Viacom claims the programme has already returned US$15 billion to shareholders since October 2010.
“We remain steadfastly committed to returning capital to shareholders through stock buybacks as well as our ongoing dividend programme,” said Dauman. “This temporary pause reflects our history of sound financial management and our commitment to operating within Viacom’s target leverage ratio.”