Viacom to Write Down $785 Million in Restructuring

Realignment will save $350 million annually, company says

Philippe Dauman

Viacom Inc. summarized and detailed its ongoing realignment on Monday, which President and CEO Philippe Dauman said is “largely completed.”

The company is writing-down underperforming programming and costs associated with workforce reductions — as well as accelerate the amortization of expenses — to the tune of $785 million. That pre-tax charge will be recognized in 2015’s second quarter.

Thanks to its internal shakeup, Viacom is set to save $350 million annually. The savings for this fiscal year will come to half of that.

As a result of Monday’s late press announcement, Viacom stock (VIA) began trading down in the after-hours stock markets. The stock was up during the American trading day.

“Viacom has a powerful combination of world-class brands and popular content that is driving our business across the globe,” Dauman said in the media release detailing the financial figures. “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,” he continued. “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.”

Additionally, Viacom will temporarily pause share purchases under its current $20 billion stock repurchase program in order to remain with its target leverage ratio. The repurchase program has returned $15 billion to shareholders since its inception in October 2010, including $1.5 billion in the first half of fiscal 2015.

This portion of the announcement may explain a large percentage of the post-U.S. stock market declines. Still, the company anticipates resuming stock repurchases by October, when it begins its next fiscal year.

On pressing that program’s pause button, Dauman stated: “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.”

As previously reported, Viacom streamlined three domestic network groups into two new organizations. The company is reallocating resources to expand its capabilities in data analysis, technology development and consumer insights.

Viacom also laid off a number of employees in 2015.

Comments