Struggling media giant Viacom has punctuated a major restructuring effort by taking a $785 million charge on its fiscal second-quarter books.
About $355 million of that write-down will go to cover the cost of deep staff cuts at the company's MTV Networks division. Another $430 million will go to the "abandonment" of select shows on Viacom cable networks that aren't cutting the ratings mustard.
"The charge reflects the impact of write-downs of underperforming programming, including the abandonment of select acquired titles, as well as costs associated with workforce reductions," Viacom said in a statement.
Ratings are down in the key 18-49 demographic by over 9 percent at Viacom's Comedy Central. They're down a whopping 27 percent in prime time for the MTV flagship channel, and 33 percent overall among kids ages 2-11 for Nickelodeon.
As taste quickly changes among the conglomerate's youthful target audiences, and as the TV ad market continues to soften, no major programmer has suffered more than Viacom.
The company is doing other things to try to right its course. For example, it's relaunching its Noggin brand as an SVOD platform aimed at kids. But analysts including Bernstein Research's Todd Juenger have been skeptical of the company's ability to execute a major turnaround quickly.
"The future is more likely negative than positive," Juenger wrote in January. "Conventional TV audiences are getting worse, the ad demand environment doesn't seem to be getting any better, domestic affiliate fees are already at the low-end of their 'high-singles/low-doubles' [digit percentage gain] guidance and there is real risk of future distribution losses."
However, in a note to investors Tuesday, investment bank Jefferies struck a more optimistic chord, noting "the worst is likely behind the stock."
Noting that Viacom currently has 70 percent of the U.S. pay-TV market locked up in long-term renewal deals, Jefferies rated Viacom "buy," noting, "While there will be an argument that the stock is 'dead' money, we think the combination of upcoming MVPD renewals and valuation will ultimately matter."
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