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Viacom Restructuring Begins in Earnest with More Executive Departures

Viacom put its best corporate foot forward on Wednesday night, treating a crowd of advertisers numbering in the hundreds to a sneak preview of the coming season on its Nickelodeon kids network. There was a live performance of a scene from a possible new Broadway show for SpongeBob SquarePants, a cameo from actor Will Arnett, and tables piled with pulled-pork sandwiches and fancy vegetables.

Behind the scenes, however, the company is quietly restructuring itself as it is pressured by the quick rise of digital media. Three of the company’s operating units are being reworked into two. Three senior executives are set to depart. And an unknown number of jobs are expected to be eliminated, according to a person familiar with the situation.

The New York-based owner of cable networks like MTV, Comedy Central and VH1 is grappling with new challenges presented by consumers’ rapid embrace of digital media. Viewership in the 18-49 demo is down more than 20% at BET, Spike and Comedy Central quarter to date as of Feb. 15, according to data from Bernstein Research media analyst Todd Juenger, and more than that at MTV and VH1.

In a January 29 call with investors, Viacom CEO Philippe Dauman said the company had “identified specific areas” where operations could be made more efficient. Scrutiny of these areas could take several weeks, the person familiar with the company suggested, and could encompass everything from reduction of staffing to writing down the cost of programming that is deemed not to be performing well.

Viacom is just the latest big U.S. media concern to reorganize itself as new technology draws consumers away from linear broadcast and cable television, the medium that has typically attracted the most viewers and the most dollars from advertisers. Time Warner last year reduced staff at HBO, Warner Bros. and Turner Broadcasting. At 21st Century Fox, ad-sales operations for broadcast and cable were combined, resulting in the elimination late last year of several dozen positions.

Some Viacom veterans are leaving the company, though it remains unclear if their departures are the direct result of the company’s transformation. Van Toffler, a longtime programming executive who has had a hand in everything from “The Osbournes” on MTV to “Party Down South” on CMT to films like “Napoleon Dynamite” and  “Election,” is set to depart to form his own content company, though he will continue to exec produce certain events for Viacom. In the aftermath of that decision, Viacom said it would rework the way its cable networks are run, with Comedy Central and Spike being combined under executive Doug Herzog with MTV, VH1 and Logo, and CMT and TV Land being placed under Cyma Zarghami, who has long supervised the Nickelodeon networks.

Larry Jones, the president of TV Land who has been with Viacom since 1988, will also depart. And Carole Robinson, an executive vice president who has served as a spokeswoman for the company and its cable networks since the 1980s, is set to leave at the end of this week, according to people familiar with the situation.

There are bright spots at the company, but they lie mainly among some of its smaller networks. According to Bernstein’s Juenger, ratings have improved at TV Land, MTV2, VH1 Classic and the NickMom programming block in the week ending Feb. 15.

Dauman has recently articulated a strategy of creating new methods for distributing the company’s content that will not depend on measurement systems such as Nielsen, which have long been the industry’s norm. Instead, Dauman wants to create new opportunities for sponsors that will rely more heavily on partnerships that deploy ad messages in more specific fashion, whether they appear on the screens of mobile tablets or in social media.

At the Nickelodeon celebration, part of the annual ad-sales process known as the upfront, Viacom unveiled a corporate unit devoted to crafting marketing efforts tied directly to Nickelodeon content, as well as a new subscription-based service called Noggin that will make old favorites like “Blue’s Clues” and “Little Bear” available to people via smart phone and tablet apps.

Viacom has acknowledged the new landscape it inhabits. During a short comedic film shown at the start of the Nickelodeon event, Dauman welcomed two of the network’s child stars into his office, and urged them to get an education. Before leaving for a meeting, however, he gave them a difficult task: Help Viacom figure out how to reach new audiences who do not watch TV programming in traditional fashion.

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