Press release from Viacom, April 6, 2015:
Viacom Inc. today announced the elements of its strategic realignment, including initiatives designed to promote greater cross-brand collaboration, focus on new growth areas, and improve operational efficiency and financial performance.
Following a company-wide review across its worldwide Media Networks, Filmed Entertainment operations and corporate functions, Viacom is implementing significant strategic and operational improvements, including reorganizing three of its domestic network groups into two new organizations. The new structure realigns sales, marketing, creative and support functions, increases efficiencies in program and product development, enhances opportunities to share expertise, and promotes greater cross-marketing and cross channel programming activity. The Company is also reallocating resources to expand its capabilities in critical business areas including data analysis, technology development and consumer insights, reflecting the rapidly changing media marketplace, shifting consumer behavior and evolving measurement practices.
President and CEO Philippe Dauman said, “Viacom has a powerful combination of world-class brands and popular content that is driving our business across the globe. 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.”
In connection with the realignment, Viacom will recognize a pre-tax charge in the second fiscal quarter of 2015 of approximately $785 million. The 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. The charge also reflects accelerated amortization of programming expenses associated with a change in the Company’s ultimate revenue projections for certain original programming genres that have been impacted by changing media consumption habits.
The initiatives are expected to provide ongoing annual savings of approximately $350 million. The savings in fiscal 2015 are expected to be approximately $175 million.
In light of these actions and previously discussed strategic acquisitions anticipated in the current fiscal year that could total approximately $400 million, Viacom will temporarily pause share purchases under its current $20 billion stock repurchase program in order to stay within 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. The Company anticipates resuming stock repurchases no later than October 2015, when it begins its next fiscal year.
Mr. Dauman added, “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.”
Viacom will report results for the fiscal second quarter ended March 31, on April 30, 2015.