Viacom restructuring includes $785-million write-down
Viacom Inc. has completed its companywide restructuring, which included hundreds of job cuts and a pre-tax accounting charge of $785 million.
The media company has been roughed up during the last year. Its premier television networks, including MTV and Nickelodeon, have suffered dramatic ratings declines and the company’s stock has dropped nearly 18%.
The write-down adjusts for the diminished value of television shows that have performed poorly in the ratings.
Reality TV shows and acquired programs made up the bulk of the charge, which was disclosed Monday in a Securities and Exchange Commission filing.
In the past, a TV company could wring profits from shows through repeat airings of episodes. But reality TV shows, in particular, perform poorly after the initial telecast, and thus have a limited shelf life.
Severance costs for employees who were terminated as part of the restructuring, which was announced two months ago, also contributed to the charge. Viacom declined to say how many positions were cut.
“This strategic realignment, which is largely complete, will allow us to sharpen our focus on driving long-term growth in a rapidly changing industry,” Viacom Chief Executive Philippe Dauman said in a statement.
The New York media company, controlled by billionaire Sumner Redstone, owns the Paramount Pictures movie studio and cable networks MTV, BET, Comedy Central, Nickelodeon and Spike.
“The charge reflects the impact of write-downs of underperforming programming, including the abandonment of select acquired titles, as well as costs associated with workforce reductions,” Viacom said in a statement.
Viacom said the restructuring ultimately would save the company $350 million annually. However, it expects the savings during this fiscal year to amount to $175 million.
As part of the restructuring, the company consolidated its three television network groups into two divisions. The company’s Melrose Avenue film unit, Paramount Pictures, remains a separate division.
The charge will be recorded during the fiscal quarter that ended March 31. The company plans to detail its earnings at the end of April.
Viacom shares closed Monday at $68.60, up $1.01, or 1.5%.
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