Viacom to cut 850 jobs in global restructure

by Tristan O'Carroll, mediaweek.co.uk 04-Dec-08, 15:35

LONDON - Viacom has announced a major restructuring across its entire global business, which includes MTV Networks and Paramount Pictures, and will cull 7% of its workforce.

Viacom will cut jobs in all divisions of the company, which will result in the reduction of its workforce by approximately 850 posts. The company is also suspending senior level management salary increases for 2009. In addition, the company will write down certain programming and other assets.

The restructuring and write-downs together will result in a pre-tax charge of between $400m (£273m) and $450m (£307m) in the fourth quarter of this year. However, the cutbacks are expected to improve profitability, resulting in pre-tax savings of between $200m (£137m) and $250m (£170m) in 2009.

Viacom said the plan was designed to better align its costs with what it termed "evolving economic conditions".

Viacom president and chief executive Philippe Dauman said: "We are moving rapidly to adapt to the challenges presented by the current economic environment.

"We are committed to continuing this prudent course and aggressively managing our businesses for long-term growth."

The moves are the latest sign that the economic downturn is seriously impacting Viacom. Its majority shareholder Sumner Redstone has in recent weeks been attempting to restructure $1.6bn (£1.1bn) of debt that threatens his empire. This week, he offloaded his controlling stake in the computer games company behind Mortal Kombat, Midway Games.

Redstone has to refinance $800m (£545m) of his $1.6bn of debts at National Amusements, his private holding company, before the end of the year.