Viacom sticking by cost cuts; sees no major deals
NEW YORK, Dec 8 (Reuters) - Viacom Inc (VIAb.N) Chief Executive Philippe Dauman, who just announced sweeping job cuts at the media company, said he won't abandon the cost-cutting moves even after the economy recovers.
Speaking on Monday at the UBS Media investor conference, Dauman said the recent "changes are not changes we need to reverse when the economy improves" and were "done in a way that doesn't impact out strategy."
Dauman addressed the question of costs just days after Viacom, which owns MTV Networks and Paramount movie studio, announced it would save $200 million to $250 million in 2009 from a series of cost-cutting moves, including the elimination of about 7 percent of its workforce.
Over recent months, the company also has frozen salary increases for senior level management in 2009, consolidated its leases, and pared back its film releases, among other steps.
"We've always tried to operate efficiently and find greater efficiencies, but we... have to look at all our operations around the world to see if we can organize ourselves better," Dauman said.
Shares of Viacom closed up 5.38 percent on Monday.
While Dauman emphasized that Viacom is less reliant on advertising than other media companies, its share price has nonetheless been battered in the last three months, dropping 47 percent.
That is more than declines suffered by Time Warner Inc. (TWX.N), Walt Disney Co (DIS.N) or News Corp NWSa.N, although share prices for all the major media companies are down at least 25 percent in the last three months.
But even with stock prices under pressure throughout the media industry, Dauman said it was unlikely that Viacom would be in the market for a major acquisition.
"I don't think from Viacom you should expect any significant acquisitions," he said.
The drop in media industry stock prices is due to worries about 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 caused companies to dramatically slash spending on marketing and advertising.
Viacom gets about 30 percent of its revenue from advertising, with the rest of its revenue coming from areas such as cable affiliate fees, films or video games, including the hit "Rock Band."
Dauman described "Rock Band," developed by MTV's Harmonix and published by Electronic Arts Inc (ERTS.O), as "a strong long-term franchise" that "really fits well with our business." The game, which lets fans play plastic guitars along with music on TV screens, competes against Activision Blizzard Inc's (ATVI.O) rival "Guitar Hero" game.
Because of Viacom's association with MTV, "we also have the opportunity to attract talent to that game in a way our competition have a tougher time doing," Dauman said.
Viacom is introducing "Rock Band 2" and recently struck a deal to use songs by The Beatles in a custom video game similar to "Rock Band."
Viacom shares rose as much as 8.5 percent to $16.14 before closing at $15.67 on the New York Stock Exchange. (Reporting by Paul Thomasch; editing by Carol Bishopric)
