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Viacom Slashes Staff, Plans Review of Operations

Dec 4, 2008  •  Post A Comment

Viacom announced its long anticipated staff cutback on Thursday, saying it was reducing its workforce by 7%, or 850 jobs, as part of a restructuring designed to reduce costs to fit recessionary economic conditions.
The company is also suspending pay raises for senior level managers in 2009, and will write down the value of some programming and other assets.
The cuts show the company isn’t immune to the declining economy and come after a difficult third quarter in which overall profit declined. Operating profit at Viacom’s cable networks also fell in the third quarter, reflecting ratings challenges at some networks and a difficult advertising sales environment.
“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.”
Judy McGrath, CEO of Viacom’s MTV Networks division, said that some groups and functions are being consolidated, and others are being outsourced.
The company’s resources are being aligned across brands and platforms. “Specific details of the changes and how they affect you and your group will be communicated by your department heads today,” she said in a memo to staff.
The changes also affect Viacom’s international operations.
“Our International organization continues to implement a new approach to structure and operations, which has been underway throughout the year,” Ms. McGrath added in the memo.
“This is not just about MTVN, Viacom or even sister media companies—it’s happening in every industry, all over the world. This doesn’t make it easier to say goodbye to people we love and respect, but it is the hard truth,” Ms. McGrath said.
In a separate memo to the company, Mr. Dauman said that “top managers at every part of the company worked thoughtfully, carefully and compassionately to create a leaner, more focused organization. It was not an easy task, but it was an essential step that will keep Viacom at the competitive forefront today and tomorrow.”
The restructuring will result in a charge of $400 million to $450 million against fourth-quarter earnings, the company says, and the staffing and compensation actions and write-downs are expected to result in pre-tax savings of $200 million to $250 million in 2009.
The news comes as NBC also announced job cuts.
(Editor: Baumann. Updated 11 a.m. throughout.)

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