Viacom Inc. announced Monday that it plans to take a $785
million pretax charge as part of a strategic realignment that
includes layoffs and writing down the value of underperforming
programming.
The media giant said the realignment includes reorganizing three
of its domestic network groups into two new organizations.
The company said the second-quarter charge reflects write-downs
of underperforming programming, including the "abandonment of
select acquired titles' and costs related to workforce reductions.
The charge also includes accelerated amortization of programming
expenses related to a change in revenue projections "for certain
original programming genres that have been impacted by changing
media consumption habits."
Viacom has faced concerns on Wall Street that pay-TV providers
will decide they can do without its bundle of channels, including
Comedy Central, Nickelodeon, MTV, TV Land and Spike.
The initiatives are expected to provide ongoing annual savings
of about $350 million, Viacom said, including $175 million in the
current fiscal year.
Viacom said it would temporarily pause stock buybacks. It
expects to resume repurchases by October, when its next fiscal year
begins.
The company's biggest channels have suffered from ratings
declines this season. It has blamed the shortfalls partly on
measurement tools that have not yet caught up with the shift of its
young audience's viewing patterns to digital devices.
In recent executive changes at Viacom, The Wall Street Journal
reported last month that Viacom tapped advertising executive Jeff
Lucas to lead a consolidated ad sales unit, and 28-year veteran Van
Toffler--president of the group that houses the Viacom cable
channels--announced in February that he would leave the company in
April.
Viacom said Monday that it would reallocate resources to expand
in "critical business areas including data analysis, technology
development and consumer insights, reflecting the rapidly changing
media marketplace, shifting consumer behavior and evolving
measurement practices."
Write to Josh Beckerman at josh.beckerman@wsj.com
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