Viacom Inc (O:) slashed its quarterly dividend by 50 percent on Wednesday and said interim Chief Executive Tom Dooley would leave the company.
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The media company also said today that it will no longer seek to sell a minority stake in Paramount Pictures TV and film studio.
Viacom directors also acknowledged that the company needs more cash: They announced a plan to cut its dividend payout in half to 20 cents a share and increase borrowing.
Viacom has been struggling to improve ratings as more younger viewers go online to watch their favorite shows. We foresee one of two things happening: “either the board suspends the entire dividend (which would shock the market but is probably the right thing to do); or the board implements a cut and another cut a month or two from now”, she added.
The decision to cut the dividend came after a Viacom board meeting, which included new directors brought on by the Redstones, as well as existing directors. Dauman saw the sale as a way to unlock value for shareholders, who have seen their shares plummet in value in recent years.
Dooley, Dauman’s longtime right-hand man, took over the interim role after Dauman resigned from the top job.
Dooley will stay on through November 15 to facilitate an “orderly transition”. Class B non-voting stock, which is available to invest in for the general public, dropped 1.5% in early trade on Wednesday, with its Class A controlling stock sliding 1% after the beleaguered company issued a profit warning, forecasting adjusted earnings per share for the fourth quarter will be in the range of 65 cents to 70 cents. Analysts had been expecting 89 cents a share, according to estimates compiled by Thomson Reuters.
Meanwhile, Viacom cut its earnings estimates for the September quarter due to a $115 million impairment charge for Paramount “related to the expected performance of an unreleased film” as well as severance expenses likely due to the the exit agreement for former CEO Philippe Dauman.
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Viacom’s Class B shares rose 18 cents, or 0.5 percent, to $36.34 at 10:08 a.m.in NY.
