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Viacom restructures to take $785 mn charge, brings TV networks into two units
MUMBAI: Media giant Viacom Inc has stated that it would take $785 million in pre-tax charges for job cuts and to write down the value of underperforming shows hurt by weak ratings, soft advertising market and growing online competition.
This is the result of a company-wide restructuring that eliminated several senior posts and included write-downs for programming that failed to generate satisfactory audience ratings. Reality TV shows and acquired programmes made up the bulk of the charge, which was disclosed in a Securities and Exchange Commission filing.
Viacom chief executive Philippe Dauman said in a statement, “This strategic realignment, which is largely complete, will allow us to sharpen our focus on driving long-term growth in a rapidly changing industry.”
As per reports, MTV and Nickelodeon suffered dramatic ratings declines and the company’s stock has dropped nearly 18 per cent.
In a statement, Viacom said, “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.”
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.
However, several reports suggest that the layoffs affected as many as 400 people, while the shows being written down include reruns of ‘CSI’, ‘Entourage’ and ‘Community’ among others.
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. Comedy Central is now grouped with MTV, Logo and VH1, while TV Land and CMT have been placed alongside Nickelodeon. The company’s Melrose Avenue film unit, Paramount Pictures, remains a separate division.
The charge will reportedly be recorded during the fiscal quarter that ended 31 March.