Investors 'fully protected' from cash crunch
Viacom chief exec Philippe Dauman said Monday that Viacom’s public shareholders “are fully protected” from the controversial cash crunch at his boss Sumner Redstone’s holding company, National Amusements.
NAI, which controls Viacom and sister company CBS, owes banks $800 million later this month, and Redstone has been scrambling to come up with the cash in one of media’s most dramatic corporate storylines of this economic downturn.
Redstone sold 7 million Viacom shares about two months ago but has promised skeptical investors he won’t unload more.
“I am not involved in the NAI discussions; I am totally focused on running Viacom,” Dauman said in a Q&A at the UBS media conference in Gotham. “It doesn’t impact our financial position (and) we have taken every appropriate governance measure to make sure that Viacom is not affected by the National Amusements situation.”
Dauman also emphasized that last week’s hefty round of layoffs, amounting to 7% of the company’s workforce, was part of a “thoughtful, well-executed examination” of Viacom’s position and won’t affect its businesses or strategy.
Viacom’s cost cuts came with news of a $400 million-$450 million charge the company plans to take this quarter due in large part to what Dauman called “program abandonment” at its most challenged networks, MTV, VH1 and BET. With ratings slipping and advertising soft, the networks division, Viacom’s largest, is revising its programming strategy, including a changing of the guard at BET. MTV is tinkering with repeats, which at some point stopped rating as highly as they used to, adding its own new original programming and dumping some acquired shows.
Economic woes also are drying up what once appeared to be an endless stream of outside financing available to film studios. Dauman seemed to say that Paramount is weathering the shift by co-financing films and making fewer of them. The studio’s greenlighting process has become extremely rigorous, and Par will turn out fewer than 20 pics a year, mostly focused on franchises like “Transformers,” “Iron Man,” “Indiana Jones” and “Star Trek” plus product from inhouse labels such as MTV and Nickelodeon.
“So am I hearing you saying you’re in a steady state without the availability of third-party financing right now?” asked Jeff Sine, a UBS vice chairman and global head of technology, media and telecom banking.
“Yes,” said Dauman.
He said the new movie channel Viacom is creating with Lionsgate and MGM is still on track for an Oct. 1 launch. The partners have been working through some ideas for original programming and have had “lots of good conversations with distributors, taking their input on what the channel should look like.” Dauman expects a “branding” announcement soon. It seems likely that would be the name of the channel, which has gone without one since it was announced last April.
Dauman also advised investors not to expect any major acquisitions by Viacom, despite the stock market rout and economic uncertainty that have crushed valuations and created a shopper’s paradise for those so inclined.
“We have been focused for a while really, since I came in as CEO at the end of 2006, on organic growth and have not made significant acquisitions,” he said, and that’s not going to change.
As the overall market rallied on Monday, Viacom shares closed up 1.11% at $17.32.