NEW YORK (AdAge.com) -- Viacom CEO Philippe Dauman announced a restructuring that will see 850 employees eliminated, or about 7% of the company's total work force.
The restructuring will include cuts at all divisions of the company, which includes MTV Networks, BET Networks and Paramount Pictures. Viacom is also suspending salary increases for senior staff in 2009, and will write down "certain programming and other assets."
"Even in these tough economic times, Viacom has a strong hand to play," Dauman wrote in a memo to staff. "Unfortunately, our advantages and best efforts can't completely protect Viacom from the very serious and broad-based challenges of this economic recession."
The job cuts and salary freezes are expected to generate $200 million to $250 million in cost savings in 2009. The company will take a charge of $400 million to $450 million in the fourth quarter.
Viacom has had a difficult 2008, with declining ratings at its flagship network MTV and the lack of a tentpole summer blockbuster on par with 2007's "Transformers." The company reported a 37% drop in earnings in the third quarter, due in part to a 2% worldwide drop in ad revenue. Revenue rose 4% to 3.4 billion from $3.2 billion a year ago.
Despite all the cuts, Mr. Dauman remained optimistic about Viacom's prospects for 2009.
"Viacom's outstanding brands, diverse revenue streams and global footprint all provide a significant and enduring foundation for future growth," he said. "The steps we have taken over the last two years, including those we are announcing today, have put us on very sound financial footing with a strong balance sheet and substantial cash flow. This affords us the flexibility to successfully deal with challenges while also capitalizing on the opportunities that inevitably arise in uncertain times. We are committed to continuing this prudent course and aggressively managing our businesses for long-term growth."