Viacom Lays Off 850, Takes $450 Million Charge
Viacom’s long-rumored cuts are here. The media conglomerate is firing 850 people–seven percent of its workforce–and will take a charge of up to $450 million. Viacom (VIA) says the cuts will save it up to $250 million next year.
Company officials say the cuts will be spread throughout the company–at all of the cable network properties, including MTV, BET, etc., as well as its Paramount movie studio–and will include international units. Anyone laid off will be paid through the end of the month, and severance will kick in after that.
Here’s the official release, followed by an internal email from CEO Philippe Dauman and CFO Tom Dooley, and a separate email from Judy McGrath, CEO of MTV Networks.
NEW YORK, December 4, 2008 — Viacom Inc. (NYSE: VIA and VIA.B) today announced restructuring plans designed to better align its organization and overall cost structure with evolving economic conditions. These changes include broad-based staffing reductions, which will be implemented across all divisions of the Company. This process will result in the reduction of Viacom’s workforce by approximately 7 percent, or 850 positions. The Company is also suspending senior level management salary increases for 2009. In addition, reflecting a comprehensive review of its operations, the Company will write down certain programming and other assets.
The restructuring and write-down together will result in a pre-tax charge of $400 million to $450 million, or $0.42 to $0.48 per diluted share, in the fourth quarter of 2008. These staffing and compensation actions and write-downs are expected to result in pre-tax savings of $200 million to $250 million in 2009.
Viacom President and CEO Philippe Dauman said, “We are moving rapidly to adapt to the challenges presented by the current economic environment. 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.
“Viacom’s outstanding brands, diverse revenue streams and global footprint all provide a significant and enduring foundation for future growth. The steps we have taken over the last two years, including those we are announcing today, have put us on very sound financial footing with a strong balance sheet and substantial cash flow. This affords us the flexibility to successfully deal with challenges while also capitalizing on the opportunities that inevitably arise in uncertain times. We are committed to continuing this prudent course and aggressively managing our businesses for long-term growth.”
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Memo from Philippe Dauman and Tom Dooley:
Dear Colleagues:
With less than a month until the close of 2008, our entire organization continues to do everything possible to anticipate and adapt to the unprecedented changes affecting all our businesses. We know it hasn’t been easy and we couldn’t be more proud or more appreciative of how you have risen to the challenge.
Even in these tough economic times, Viacom has a strong hand to play. We have a broad stable of outstanding brands, diverse revenue streams and an impressive global footprint, backed up by exceptional financial strength. Added to that we have talented employees, extremely able leaders and a creative ingenuity that runs deep.
Unfortunately, our advantages and best efforts can’t completely protect Viacom from the very serious and broad-based challenges of this economic recession. Viacom’s long-term health will depend on our shared commitment to adapt, to innovate and to make difficult choices. To compete and thrive, we need to create an organization and a cost structure that are in step with the evolving economic environment.
Today, we are announcing a company-wide restructuring plan that includes staffing reductions in all divisions. This will result in a reduction of our worldwide workforce of approximately 7 percent, or about 850 positions. We are also suspending salary increases for the Company’s senior level management in 2009. In addition, after a comprehensive review of our operations, we will write down certain programming and other assets. These three actions will bring us significant cost savings and other efficiencies.
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. Department heads and supervisors will provide you with more information about the changes that will be taking place in your division.
Saying goodbye to friends and colleagues is always difficult, particularly when we have shared so much. Those of you who will be leaving should be proud of your contributions, which we will always respect and appreciate. We thank you and we wish you the best.
The true measure of an organization is how it deals with change and overcomes challenges. We know that you are up to the task and that together we will push through the difficulties ahead and go on to even greater achievements.
We truly appreciate your continued commitment and hard work and we thank you for everything you do each day.
Sincerely,
Philippe and Tom
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Memo from Judy McGrath:
I’m sure you’ve read Philippe and Tom’s note, and I want to talk to you about what it means for MTV Networks–today and in the context of our overall mission and strategy going forward.
We all know there’s a fundamental restructuring of our entire economy going on, and it extends beyond our borders. 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. In these tough times, we are responsible for sustaining and reinventing our company as thoughtfully as we can. The changes we’re making today are necessary, difficult, and the responsible way for us to move forward.
Here in the U.S., we’re consolidating some groups, centralizing functions and outsourcing others, and aligning our resources 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. Our International organization continues to implement a new approach to structure and operations, which has been underway throughout the year. Further moves will be outlined by the leadership of each MTVNI region.
Change like this is so tough, to say the least. But we must accept that we operate today in a state of constant evolution, constant change.
We believe the next chapter for each of us will be all about new possibilities, creativity and invention. This is where our opportunity lies. We can use this moment of global transformation to reassert our capacity to innovate, to inspire through creative and business excellence, to connect with our audience as powerfully as ever. We will be a leaner organization, but we will always be champions of new ideas, champions of all of our customers and brands, and leaders in new ways of doing business.
Everyone here contributes to MTVN and Viacom every single day and night without exception. We hate to see dedicated friends and co-workers leave us, and we say goodbye with care, gratitude, support and respect.
Thank you all for your continued commitment to MTV Networks.
— Judy
