Viacom said Monday that it will take a $785 million fiscal second quarter restructuring charge tied to restructuring plans including reorganizing three of its domestic network groups into two organizations.
Viacom is reorganizing three of its domestic network groups into two new organizations, realigning sales, marketing, creative and support functions. The moves are aimed at increasing efficiencies in program and product development, enhancing opportunities to share expertise, and promoting greater cross-marketing and cross channel programming activity.
The moves are part of a February restructuring that saw the creation of Viacom Music & Entertainment under new president Doug Herzog and Viacom Kids and Family Group, headed by long-time Nickelodeon executive Cyma Zarghami.
“Viacom has a powerful combination of world-class brands and popular content that is driving our business across the globe,” CEO Philippe Dauman said in a statement. “We will continue to lead the way in connecting our vibrant brands to audiences through both traditional and innovative new platforms. This strategic realignment, which is largely completed, will allow us to sharpen our focus on driving long-term growth in a rapidly changing industry. We will transition rapidly into the future, generate substantial cost savings and continue to increase our investment in original programming to bring our audiences great content in new and groundbreaking ways.”
The $785 million 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. Viacom did not say how many staff were impacted by the reductions.
Viacom said the moves will generate annual savings of about $350 million. The savings in fiscal 2015 will amount to about half that -- $175 million. Viacom’s fiscal year ends in September.
In addition, Viacom said it will temporarily halt its share repurchases under its current $20 billion program in order to stay within its target leverage ratio. The company plans to restart the buybacks by the beginning of its new fiscal year on Oct. 1.
“We remain steadfastly committed to returning capital to shareholders through stock buybacks as well as our ongoing dividend program. This temporary pause reflects our history of sound financial management and our commitment to operating within Viacom’s target leverage ratio,” Dauman said in a statement.”
Viacom will report results for the fiscal second quarter ended March 31, on April 30.