After weeks of layoffs and corporate reorganization to make Viacom more efficient and to promote future growth in the face of a more competitive market, the company on Monday announced that it is taking a $785 million pre-tax charge in the second fiscal quarter of 2015.
Viacom said the changes it has made will provide annual savings of about $350 million. The savings in fiscal 2015 will be approximately $175 million.
The impact of the strategic shifts have resulted in layoffs at MTV, Paramount, TV Land and other divisions.
“This strategic realignment,” said Viacom president/CEO Philippe Dauman in a statement, “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."
The layoffs, restructuring and acquisitions associated with the new strategy will cost Viacom about $400 million, according to the announcement. As a result Viacom will temporarily stop share repurchases under its current $20 billion stock repurchase program.
Viacom expects to resume buying its own stock again no later than Oct. 2015, which is when the next fiscal year begins.
“We remain steadfastly committed to returning capital to shareholders,” said Dauman, “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."
The changes and layoffs follow a company wide review across media networks, filmed entertainment and corporate functions. Three of the network groups have now been consolidated into two groups.
Viacom said it also reallocated resources “to expand its capabilities in critical business areas including data analysis, technology development and consumer insights, reflecting the rapidly changing media marketplace, shifting consumer behavior and evolving measurement practices.”
Viacom is expected to report results for the second quarter which ended March 31 on April 30.
This article was first published by The Hollywood Reporter.