Viacom looks to restructuring to drive growth
08 April 2015
US cable and broadcasting company Viacom Inc said on Monday that it would start restructuring, which would include cutting jobs, abandoning a number of its acquired titles and reorganising three of its domestic network groups into two new organisations in a bid to drive growth.
The owner of movie studio Paramount Pictures and cable networks such as MTV and Comedy Central added it would take a related pre-tax charge of about $785 million in the quarter ended 31 March.
The company also suspended its $20-billion share buyback programme due to the restructuring and the spending on acquisitions anticipated in the current fiscal year.
The company's shares retreated 1.6 per cent on Monday.
According to Viacom, the new structure would realign sales, marketing, creative and support functions and up efficiencies in programme and product development.
The company posted lower-than-expected first-quarter revenue due to weak advertising spending in the US.
According to Thomson Reuters, analysts had expected the company to post a profit of $428.3 million on revenue of $3.26 billion in the second quarter.
The company would suspend stock buybacks for as long as six months to pay for restructuring and acquisitions. The New York-based company would resume buybacks, which totaled $1.5 billion in the first half of the fiscal year, by the start of its new year in October, according to a statement Monday.
Jobs cuts at the owner of Comedy Central, Nickelodeon and MTV would help it save a targeted $350 million a year, while the company continued to invest in areas that could spur growth. The company on Monday reiterated that it would spend $400 million towards acquisitions by September.
According to Paul Sweeney, an analyst at Bloomberg Intelligence, the pressure was building on Viacom president and CEO Philippe Dauman to turn things around, Bloomberg reported.
He added persistent ratings weakness across it networks, job cuts, restructuring charges and now a suspension of the buyback represented a distressing trend for investors.