Amid an ongoing debt crisis at controlling shareholder Sumner Redstone’s movie theater company, National Amusements Inc., media giant Viacom Inc. said it will slash about 850 jobs — 7 percent of its work force — and freeze some senior-level salaries.
Viacom, which owns MTV Networks, BET Networks and Paramount Pictures, said the cuts are a response to the global economic downturn and not related to the debt problems at the theater chain.
“Viacom’s announcement today has absolutely no connection to the financial difficulties of National Amusements,” said Viacom spokeswoman Kelly McAndrew on Thursday. “They are two separate companies.”
Redstone owns a majority of Viacom through the National Amusements holding company, which has been trying to renegotiate $1.6 billion in debt, about $800 million of which matures on Dec. 19.
Certain conditions of those loans are linked to the value of Viacom and CBS Corp. stock.
Redstone was forced to sell $233 million in CBS and Viacom nonvoting shares in October to stay in compliance with the lending terms.
Analysts said that, despite cost-cutting moves, the fear of further sales hangs over Viacom and CBS’ share prices.
“Even though Redstone has sworn up and down he’s not going to sell it, who knows until it’s resolved?” said analyst Joseph Bonner of Argus Research Co. “You would normally think of a cost-saving issue as a positive. (But) there are a lot of different issues going on.”
Redstone has steadfastly said he will not sell more Viacom or CBS shares, which could dilute his control of the two media companies. He is in talks, however, to sell some or all of National Amusements’ movie theaters and its interest in slot machine supplier WMS Industries Inc.
Last week he also sold his entire 87.2 percent stake in Midway Games Inc. for less than a penny a share to generate an estimated tax loss of around $600 million for National Amusements.
In Thursday’s announcement, Viacom said it also plans to write down the value of some programming and other assets. But it maintained it has a “strong balance sheet and substantial cash flow.”
The job cuts, write-offs and suspension of some raises in 2009 are expected to generate pretax savings of $200 million to $250 million next year. Viacom will take a restructuring charge of $400 million to $450 million, or 42 cents to 48 cents per share, before taxes in the current quarter, which ends Dec. 31.
“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,” President and Chief Executive Philippe Dauman said in a statement.
Last month, Viacom reported that its third-quarter profit fell 37 percent as film studio Paramount Pictures’ theatrical revenue fell more than one-third and global ad revenue declined 2 percent.
The company was also hindered by lackluster ratings at MTV, which decreases the flow of ad revenue.
The company faces other problems such as the threat of a strike by the Screen Actors Guild early next year.
Bernstein Research analyst Michael Nathanson maintained an “outperform” rating on the stock, noting the cutback “provides a cushion to Viacom’s bottom line” against a potential further ad slowdown.
He added the cut to programming assets was a concern.
“The sizable programming write-down raises questions about the current management’s ability to effectively program their cable networks to drive ratings — an ongoing investment controversy for Viacom,” he wrote.
Kamala Harris Receives Chairman’s Prize At NAACP Image Awards
Former Vice President Kamala Harris stepped on the NAACP Image Awards stage Saturday night with a sobering message, calling the civil rights organization a pillar of the Black community and urging people to stay resilient and hold onto their faith during the tenure of President Donald Trump.
"While we have no illusions about what we are up against in this chapter in our American story, this chapter will be written not simply by whoever occupies the oval office nor by the wealthiest among us," Harris said after receiving the NAACP's Chairman's Award. "The American story will be written by you. Written by us. By we the people."
The 56th annual Image Awards was held at the Pasadena Civic Auditorium in the Los Angeles area.
Harris, defeated by Trump in last year's presidential election, was the first woman and the first person of color to serve as vice president. She had previously been a U.S. senator from California and the state's attorney general.
In her first major public appearance since leaving office, Harris did not reference her election loss or Trump's actions since entering the Oval Office, although Trump mocked her earlier in the day at the Conservative Political Action Conference.
Harris spoke about eternal vigilance, the price of liberty, staying alert, seeking the truth and America's future.
"Some see the flames on our horizons, the rising waters in our cities, the shadows gathering over our democracy and ask 'What do we do now?'" Harris said. "But we know exactly what to do, because we have done it before. And we will do it again. We use our power. We organize, mobilize. We educate. We advocate. Our power has never come from having an easy path."
Other winners of the Chairman's prize have included former... Read More