Viacom Restructuring Gives More Power To Doug Herzog, Cyma Zarghami

Governors Ball
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MTV Networks' Doug Herzog

The restructuring follows the departure of Van Toffler earlier this week.

Viacom on Thursday announced a consolidation of its leadership team, giving more power to executives Doug Herzog and Cyma Zarghami, both of whom will now lead new or expanded programming groups.

Herzog will head a newly-formed Viacom Music and Entertainment Group, while Zarghami will lead an expanded Viacom Kids and Family Group.  

Viacom CEO Philippe Dauman announced the restructuring Thursday, saying that the “new groups are an enormous opportunity for us to take advantage of our strong creative teams, to share our expertise, and to promote greater cross marketing and, in some cases, cross channel programming activity.”

BET Networks' Debi Lee, Bob Bakish at Viacom International Media Networks and Brad Grey at Paramount Pictures will continue to report to Dauman.

The restructuring follows the departure of 28-year MTV veteran Van Toffler earlier this week. Toffler, among the last executives with a connection to MTV's musical roots, announced that in April he would leave his post as head of MTV, MTV2, VH1 and LOGO. Those networks will now become part of Herzog's portfolio, which already includes Comedy Central, Spike and all digital offshoots including MTV's Always On. Herzog, however, also has a connection to MTV, joining the network in 1984 and rising to president of MTV productions and later head of Comedy Central, where he helped to launch the latter's most iconic series; South Park and The Daily Show.

TV Land, CMT and CMT Pure Country will move into Zarghami's kids and family group, which will continue to house the highly profitable Nickelodeon Group including Nickelodeon, Nick Jr., TeenNick, Nick at Nite, NickMom and NickToons.

Zarghami actually predates Dauman at Viacom — she marks 30 years at the company this year — and the two have had a close working relationship. Dauman described Zarghami as “an insightful and extremely capable leader” citing the relaunch of Nickelodeon's Teenage Mutant Ninja Turtles franchise as an “example of her ability to reimagine properties and take them to new heights.”

Viacom's networks have faced pressure lately due to sagging ratings, which has resulted in advertising declines. In the year's first quarter, the company reported a 6% drop in U.S. ad sales, a declined that was somewhat obscured by a higher affiliate fees from cable distributors and a 60% increase in international advertising sales owed in large part to the acquisition late last year of U.K. broadcaster Channel 5. The ratings declines, coupled with the higher affiliate fee demands, have prompted cable distributors to push back against Viacom, in some cases blacking out its networks entirely. But the new structure seems to provide an opportunity to reduce costs, which is in line with Dauman's recent comment that the company would pursue "a rationalization of content that no longer meets our goals" in an effort to reach "substantial" cost savings. 

"I think the broader issues is that [streaming services are] changing the ecosystem," notes Janney Montgomery Scott analyst Tony Wible. "Netlflix and YouTube have done irreparable harm that has to be addressed with investments in new program strategies and distribution platforms. There is also a greater need to streamline operations at all media companies as ad revenue and affiliate fees face growing pressure. Viacom is not the first and won't be the last to do this."

In recent years, MTV and Nickelodeon in particular have been challenged by the rise of digital streaming programming options for kids and teens. Netflix, YouTube, Vine and Instagram, Snapchat, for instance, have increasingly become a regular part of the media diet for MTV and Nickelodeon's core audiences. Comedy Central has arguably become the Viacom network with the most cache, but it suddenly finds itself at a pivotal moment, having seen the departure of John Oliver to HBO last year and Stephen Colbert to CBS later this year. And now it faces the daunting task of trying to replace Jon Stewart, who announced recently that he plans to leave his perch as host of The Daily Show later this year.