Viacom said its reorganization will result in the company taking a $785 million charge against earnings this quarter but will result in annual cost savings of about $350 million. The company also said it will pause buying back its own stock.
Viacom said its restructuring followed a company-wide review of its operations. Among the actions it took was reorganizing its Media Networks group into two main organizations. That move aligned sales, marketing and support functions and should create efficiencies in program and product development, the company said.
Viacom did not say how many staff positions were eliminated in the restructuring.
“Viacom has a powerful combination of world-class brands and popular content that is driving our business across the globe. We will continue to lead the way in connecting our vibrant brands to audiences through both traditional and innovative new platforms,” CEO Phillipe Dauman said in a statement. “This strategic realignment, 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."
Viacom said the charge against earnings reflected writing down underperforming programming and the cost of workforce reductions.
Because of the charges and previous announced merger and acquisition activity, Viacom is temporarily pausing buying back stock under its $20 billion stock repurchase program. The pause will let Viacom maintain its leverage ratio.
The company plans to resume stock buybacks at the start of its new fiscal year in October 2015.
"We remain steadfastly committed to returning capital to shareholders through stock buybacks as well as our ongoing dividend program,” Dauman said. “This temporary pause reflects our history of sound financial management and our commitment to operating within Viacom's target leverage ratio."