Responding to the economic downturn and weaker revenue at its businesses, Viacom Inc. is slashing more than 850 jobs, or about 7% of its workforce, and freezing salary increases next year for senior managers.
The deepest cuts came at Viacom's largest division -- MTV Networks, which includes cable channels MTV, Nickelodeon, VH1 and Comedy Central. Viacom's Hollywood movie studio, Paramount Pictures, let go 140 employees -- 100 in the U.S. and the remainder in its international operations. Cable channel BET is cutting about 50 jobs.
Viacom is the latest media company to get battered by the economic crisis and fall victim to steep declines in advertising and consumer spending.
NBC Universal is also joining the layoffs bandwagon -- it said Thursday that it was cutting about 500 jobs, or 3% of its workforce, including 70 from Universal Pictures and its specialty film division, Focus Features. This is part of NBC Universal's previously announced plan to cut $500 million from its $16.7-billion annual budget.
As for Viacom, the company also said it would write down certain programming and other assets, which would result in a pretax charge of $400 million to $450 million in the fourth quarter. The staff cuts and compensation reductions are expected to result in pretax savings of $200 million to $250 million in 2009, the company 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 drive our business as the marketplace stabilizes and conditions improve," Viacom Chief Executive Philippe Dauman said in a statement. The company said the layoffs would be worldwide and cut across all divisions.
Viacom reported last month that its third-quarter net income fell 37%, largely because of lower advertising revenue at its cable TV networks and an operating loss in its filmed entertainment division as a result of its movies not performing as well as the year-earlier period.
Analysts predict that Viacom's and the industry's advertising woes are far from over.
Credit Suisse analyst Spencer Wang said in a report this week that Viacom's U.S. advertising sales would decline 4% in the fourth quarter as audiences for MTV and Nickelodeon continued to shrink. MTV's fourth-quarter viewer ratings are down 22% from a year earlier, the worst decline among the company's channels, Wang wrote.
