Viacom’s board of directors moved to slash its quarterly dividend on Wednesday, adding that interim CEO Tom Dooley has opted to leave the troubled media company.
Viacom has been searching hard for ways to cut costs and the dividend reduction was widely expected by analysts. By cutting the payout in half to 20 cents per share from about 40 cents per share, Viacom saves about $300 million.
Dooley, who has worked for Viacom for more than 30 years, agreed to step up from chief operating officer to interim CEO after executive chairman and CEO Philippe Dauman resigned. Dooley had been a trusted lieutenant of Dauman’s and will remain with Viacom through Nov. 15 to help in the transition. Viacom is in the process of finding a permanent CEO.
“While this was a difficult decision for me, I have great admiration for our new board and I feel that they will be best able to execute on their vision for the company in the hands of a new president and CEO,” Dooley said in a statement. “I am certain that the board will make the most of the company’s extraordinary potential. I want to thank Sumner, Shari and the members of the board for the opportunities they have provided me. I look forward to working with them to deliver Viacom into the hands of new leadership in excellent shape and poised for a remarkable future.”
In addition to the dividend reduction, Viacom said it would also tap the debt markets to improve liquidity and financial flexibility.
“The board believes Viacom has a product strategy that is among the best in the industry. The steps we are taking will make the company financially stronger and more flexible and will position Viacom to take advantage of future growth opportunities,” said Viacom chairman Tom May said in a statement. “I am pleased that Tom Dooley has agreed to stay on as Interim president and CEO through November 15 to allow the Board to conduct an orderly succession process.’’
Dooley stepped in as interim CEO in August after a months-long battle between Dauman and former chairman and largest shareholder Sumner Redstone that began after the former CEO tried to sell a minority interest in movie studio Paramount Pictures. That move, since shelved, raise Redstone’s hackles enough to remove Dauman from the trust that would control Redstone’s shares after his death or incapacitation, and resulted in a flurry of lawsuits between the two.
“I have been energized by the passion, commitment and ideas put forward by our newly-expanded board and members of Viacom’s senior team, Viacom vice chair Shari Redstone said in a statement. “While there is more work to do, the actions announced today are an important first step towards realizing the value of Viacom’s exceptional assets and positioning the company for the future. I also want to thank Tom Dooley for his service and his willingness to stay on through this transition period.”
Viacom added that it expects adjusted diluted earnings per share for the fiscal fourth quarter will be in the range of 65 cents to 70 cents. This revision accounts for a programming impairment charge of $115 million in its filmed entertainment segment in its fiscal fourth quarter related to the expected performance of an unreleased film; reported earnings per share are expected to be $0.55 to $0.60, primarily reflecting severance expenses incurred as a result of the settlement agreement; and
Viacom will provide additional information regarding its fourth quarter and full-year results and business outlook during its regular quarterly earnings call.