Viacom Inc. (NASDAQ:VIAB) interim Chief Executive Tom Dooley has announced that he will depart in November. In his statement to company employees, Dooley said, “After a great deal of reflection and thoughtful consideration, I have decided this is the right time for new leadership to build on our progress and success and take Viacom into the future.” The statement ended, “I have no doubt that Viacom’s best days are ahead and I thank you all for your ongoing friendship and support.”
The departure announcement was a surprise to many. Mr. Dooley has been with the company for more than three decades, first joining the company in 1980. He was chosen as interim CEO after it was announced that former CEO Philippe Dauman would step down. According to people familiar with the matter, Mr. Dooley was considered a top candidate to become the permanent CEO. He will remain in the position through Nov. 15.
Viacom also announced that it is slashing its dividend in half to help get its finances in order. The company’s payout is now at at 20 cents a share, down from 40 cents. In May 2015, Viacom raised its quarterly dividend to 40 cents a share from 33 cents. The 40-cent quarterly dividend payout cost Viacom about $635 million a year, so cutting the dividend will free up more than $300 million in cash annually.
The dividend adjustment will reduce the cash payments to the Redstone family by more than $30 million a year. Sumner Redstone controls an 80 percent voting stake in the media giant through National Amusements Inc. About 10 percent of the company’s dividend payout goes to National Amusements.
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have all reported a negative outlook on Viacom. Class-B shares of Viacom have fallen by 19 percent in the past 12 months. The company has $1.4 billion of debt maturing over the next year, and more than $10 billion owed on top of that. The risk of a credit rating downgrade has pressured Viacom to raise cash and improve its operating performance.
The company forecast fiscal fourth-quarter earnings far below what analysts were expecting. Adjusted profit is estimated to be 65 cents to 70 cents a share in the period. Analysts polled by Bloomberg had predicted 95 cents, on average.
The company has also announced that it is no longer seeking to sell a minority stake in Paramount Pictures. Paramount has been struggling at the box office recently. Mr. Dauman had created a plan to sell a piece of Paramount to bring in much-needed cash.