NEW YORK (Reuters) - Viacom, the owner of MTV Networks and the Paramount movie studio, said on Thursday it will cut its workforce by about 7 percent, or 850 positions, underscoring the advertising slump afflicting most major media companies.
Viacom also plans to suspend salary increases for senior level management in 2009 and will write down the value of certain programing and other assets.
The cuts, which had been rumored for some time, come as Viacom’s stock price has slumped about 67 percent this year, an even steeper drop than other media industry powers such as Time Warner and News Corp.
Viacom shares dropped 11 cents, or less than 1 percent, to $14.40 on the New York Stock Exchange following the news.
Across media, companies are struggling in the face of an advertising downturn that is shaping up to be the worst since 2001, when the bursting of the Internet bubble and the Sept 11 fallout dramatically slashed spending on marketing and advertising.
Viacom has also been fighting against poor ratings of two of its cable TV networks, MTV and VH1, while Paramount recently scaled back its film releases to help cut costs.
Between the job losses, salary freezes and write-downs, Viacom is expecting to see pre-tax savings of $200 million to $250 million in 2009.
“We are moving rapidly to adapt to the challenges presented by the current economic environment,” Chief Executive Philippe Dauman said in a statement.
In addition to the broader advertising slump, Viacom’s controlling shareholder and executive chairman Sumner Redstone faces a deadline to repay $800 million in debt associated with his main investment vehicle, National Amusements, by the end of the year.
In October, Redstone was forced to sell about $230 million of his stock in Viacom and CBS Corp, the other key component of his media empire, to meet debt payments. Since those sales, Redstone has pledged he will not divest any more shares of Viacom or CBS.
Reporting by Paul Thomasch and Jui Chakravorty Das; Editing by Derek Caney