Viacom To Take $785 Million Pre-Tax Charge In Second Quarter
April 6, 2015 at 4:43 PM (PT)
VIACOM has announced that it will take a $785 million pre-tax charge in its second fiscal quarter as part of what it calls a "strategic realignment" of its operations.
The changes include write-downs for underperforming programming, "including the abandonment of select acquired titles," plus the cost of layoffs and accelerated amortization of programming expenses due to changes in revenue projections for some original programming genres "impacted by changing media consumption habits." The company says it expects ongoing annual savings of about $350 million from the changes; savings for 2015 are projected to be about $175 million. And VIACOM will "temporarily pause" its $20 billion stock buyback program but expects to resume the plan by OCTOBER.
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."
On the pause in the stock buyback plan, 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."