Following a calamitous 37% drop in third quarter profits, media conglomerate Viacom, owner of MTV, BET and Paramount Pictures, has announced plans to eliminate 850 jobs, approximately 7% of its workforce, across all divisions and departments. Along with the layoffs, Viacom will also freeze some senior level pay raises for the coming year. (Yes, you read that correctly: 850 jobs gone, but only some high level executives won’t get a bonus next year. Ain’t croneyism grand?)
The exact number of cuts at MTV have yet to be announced, but already MTV and RealNetworks have slashed 25 jobs with the closing of music downloading service Rhapsody’s New York office and rumor has it that even John Norris has been axed. Meanwhile, Paramount Pictures has let go of 140 employees, and cable channel BET cut roughly 50.
Viacom expects to save $200-$250 million pretax as a result of the cuts and salary freezes. However, it will cost the company $400-$450 million in fourth quarter restructuring fees to rearrange Viacom into a working order that can weather the recession as best as possible. But considering how deep in debt chairman and general plague upon humanity Sumner Redstone is, I don’t think this restructuring has a great chance of success.
According to the AP, Redstone’s National Amusements, which owns controlling interests in CBS as well as Viacom, is $1.5 billion in the red. Along with the layoffs at Viacom, Redstone attempted to ease his company’s debt by selling 80.3 million shares of Midway Games, the makers of Mortal Kombat, to a private investor for 12¢ per share on the condition that the investor also take on $70 million of Redstone’s debt. The Midway deal will ultimately amount to an $800 million loss and will only cover about 5% of the debt.
So yeah, with business skills like that, it’s hard for me to believe this Viacom restructuring will work at all. Basically, Redstone is gonna have to muster up the courage and sell his beloved Viacom, but considering how Redstone’s stubbornness has managed to estrange him from his entire family as well as ruin his business, I don’t think that will happen anytime soon. He’ll realize the errors of his ways at some point, though. Say it with me now, “Rosebud.”
