Viacom Implements Strategic Realignment To Drive Growth

(RTTNews) - Media conglomerate Viacom Inc (VIAB, VIA) on Monday said it is effecting major strategic and operational improvements, including reorganizing three of its domestic network groups into two new organizations.

The strategic realignment follows a company-wide review across its worldwide Media Networks, Filmed Entertainment operations and corporate functions, Viacom said in a statement.

Salient features of the realignment include steps to promote greater cross-brand collaboration, focus on new growth areas, and improve operational efficiency and financial performance.

In connection with the realignment, Viacom said it would recognize a pre-tax charge in the second fiscal quarter of 2015 of about $785 million.

The charge reflects the impact of write-downs of underperforming programming, 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.

Viacom expects the initiatives to provide ongoing annual savings of about $350 million. The savings in fiscal 2015 are expected to be about $175 million.

Elaborating on the realignment, Viacom said 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. This comes amid the changing media marketplace, shifting consumer behavior and evolving measurement practices.

CEO Philippe Dauman said the strategic realignment, largely completed, will allow Viacoms to focus on long-term growth in a rapidly changing industry.

Dauman said Viacom would transition rapidly into the future, generate substantial cost savings and continue to increase investment in original programming.

In light of the restructuring actions and previously discussed strategic acquisitions, Viacom said it would 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. The company anticipates resuming stock repurchases no later than October 2015, when it begins its next fiscal year.

Viacom has been striving to cut costs as its cable channels are facing a decline in advertising sales. The company's media networks include MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Comedy Central, among others.

VIAB closed on Monday at $68.60, up $1.01 or 1.49%, on a volume of 2.5 million shares on the NYSE. In after hours, the stock dropped $0.61 or 0.89%.

Viacom will report results for the fiscal second quarter on April 30.