Viacom, the battered parent of MTV Networks, was the first cable programmer to announce big layoffs resulting from the economic downturn, shedding 850 employees across all of its divisions, or about 7% of its total workforce.
Viacom stock has been hammered this year – it is down more than 62% ($26.53 per share) since Jan. 2 – and the cable giant has been plagued by domestic advertising performance that has lagged its peers.
In a statement, Viacom said that it also would suspend senior level management salary increases for 2009. Reflecting a comprehensive review of operations, the company said it will write down certain programming and other assets, but did not identify them.
Viacom executive vice president of corporate communications Carl Folta said that the company will likely make a filing with the Securities and Exchange Commission detailing the asset write-downs more specifically in the future. For now, he said the assets would reflect “original, acquired and across multiple channels that don’t fit the demographic anymore or have been taken off the air.”
Folta also said that the company is not breaking down how many layoffs will occur at each unit, but said that the number of layoffs will be proportional to their total size.
“You would imagine that MTV Networks, as the biggest employer in the company probably had more than Paramount or BET,” Folta said. “We’re not breaking it down. It’s domestically, internationally and through every layer of the company up and down.”
The restructuring and write-down together will result in a pre-tax charge of $400 million to $450 million, or between 42 cents and 49 cents per diluted share. The company said that the staffing and compensation actions and write-downs are expected to result in a pre-tax savings of $200 million to $250 million in 2009.
“We are moving rapidly to adapt to the challenges presented by the current economic environment,” Viacom CEO Philippe Dauman said in a statement. “The changes we are making in our organization and processes will better position Viacom to navigate the economic slowdown and generate sizable efficiencies that will help us to drive our business as the marketplace stabilizes and conditions improve.”
Folta said that the layoffs will be completed by the end of the year, with the bulk finished in the next few days. Affected employees will receive severance packages, he said.