Viacom cuts 7% of work force
Suspends senior management raises in 2009NEW YORK -- The ax continues to swing in the entertainment industry amid a recession, with Viacom unveiling 850 layoffs Thursday morning across its operations.
The company also said it will suspend senior level management salary increases for 2009 and take writedowns on programming and other assets, whose value has declined. It didn't immediately provide details on the writedowns.
Viacom said the restructuring is designed "to better align its organization and overall cost structure with evolving economic conditions."
The 850 jobs affected amount to 7% of the company's work force.
Viacom president and CEO Philippe Dauman said the moves come with an eye on strengthening Viacom for the longer term.
“We are moving rapidly to adapt to the challenges presented by the current economic environment," he said. "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."
The restructuring and write-downs will result in a pretax charge against earnings of $400 million-$450 million, or 42 cents to 48 cents per share, in the current fourth quarter. They will lead to pretax savings of $200 million-$250 million in 2009.
Memos to staff are on the next page.
Memos to Viacom staffers:
With less than a month until the close of 2008, our entire organization continues to do everything possible to anticipate and adapt to the unprecedented changes affecting all our businesses. We know it hasn't been easy and we couldn't be more proud or more appreciative of how you have risen to the challenge.
Even in these tough economic times, Viacom has a strong hand to play. We have a broad stable of outstanding brands, diverse revenue streams and an impressive global footprint, backed up by exceptional financial strength. Added to that we have talented employees, extremely able leaders and a creative ingenuity that runs deep.
Unfortunately, our advantages and best efforts can't completely protect Viacom from the very serious and broad-based challenges of this economic recession. Viacom's long-term health will depend on our shared commitment to adapt, to innovate and to make difficult choices. To compete and thrive, we need to create an organization and a cost structure that are in step with the evolving economic environment.
Today, we are announcing a company-wide restructuring plan that includes staffing reductions in all divisions. This will result in a reduction of our worldwide workforce of approximately 7%, or about 850 positions. We are also suspending salary increases for the Company's senior level management in 2009. In addition, after a comprehensive review of our operations, we will write down certain programming and other assets. These three actions will bring us significant cost savings and other efficiencies.
Top managers at every part of the company worked thoughtfully, carefully and compassionately to create a leaner, more focused organization. It was not an easy task, but it was an essential step that will keep Viacom at the competitive forefront today and tomorrow. Department heads and supervisors will provide you with more information about the changes that will be taking place in your division.
Saying goodbye to friends and colleagues is always difficult, particularly when we have shared so much. Those of you who will be leaving should be proud of your contributions, which we will always respect and appreciate. We thank you and we wish you the best.
The true measure of an organization is how it deals with change and overcomes challenges. We know that you are up to the task and that together we will push through the difficulties ahead and go on to even greater achievements.
We truly appreciate your continued commitment and hard work and we thank you for everything you do each day.
Philippe and Tom
Memo from Brad Grey:
To: All Employees
Date: December 4, 2008
From: Brad Grey
By now, you all have seen the email from Philippe Dauman and Tom Dooley regarding Viacom's cost-saving initiatives, which are designed to better position the Company in this difficult economic climate. Like all other divisions of the Company, Paramount too is adapting to the changing conditions and, as a result, we will reduce our global workforce.
These reductions are across the studio: accounting, business/legal affairs, corporate and government affairs, home entertainment, human resources, information technology, production, studio lot operations and Vantage. The vast majority of affected employees will be notified today in the United States and in the coming days internationally. We wish them the best, and thank them for their many contributions to Paramount.
Without question, the changes we implement today required us to make difficult choices. We take these steps after a careful analysis of our overall business and as part of a broader strategy to overcome the challenges of this unusual time in the market and to chart a successful course for the future.
As we look ahead, we are encouraged by the strength of our slate, the quality of our creative partners, the innovation we see on the lot every day and the projects we have in development. These assets, coupled with your talent and hard work, I believe will enable us to remain strong over the long term.
Memo from Judy McGrath:
I'm sure you've read Philippe and Tom's note, and I want to talk to you about what it means for MTV Networks – today and in the context of our overall mission and strategy going forward.
We all know there's a fundamental restructuring of our entire economy going on, and it extends beyond our borders. This is not just about MTVN, Viacom or even sister media companies – it's happening in every industry, all over the world. This doesn't make it easier to say goodbye to people we love and respect, but it is the hard truth. In these tough times, we are responsible for sustaining and reinventing our company as thoughtfully as we can. The changes we're making today are necessary, difficult, and the responsible way for us to move forward.
Here in the U.S., we're consolidating some groups, centralizing functions and outsourcing others, and aligning our resources across brands and platforms. Specific details of the changes and how they affect you and your group will be communicated by your department heads today. Our International organization continues to implement a new approach to structure and operations, which has been underway throughout the year. Further moves will be outlined by the leadership of each MTVNI region.
Change like this is so tough, to say the least. But we must accept that we operate today in a state of constant evolution, constant change.
We believe the next chapter for each of us will be all about new possibilities, creativity and invention. This is where our opportunity lies. We can use this moment of global transformation to reassert our capacity to innovate, to inspire through creative and business excellence, to connect with our audience as powerfully as ever. We will be a leaner organization, but we will always be champions of new ideas, champions of all of our customers and brands, and leaders in new ways of doing business.
Everyone here contributes to MTVN and Viacom every single day and night without exception. We hate to see dedicated friends and co-workers leave us, and we say goodbye with care, gratitude, support and respect.
Thank you all for your continued commitment to MTV Networks.