Viacom Inc.’s interim chief executive said he plans to step down in mid-November, effectively setting a timetable for the struggling media company to chart its destiny.
Viacom said interim CEO Tom Dooley will depart a month and a half later than originally planned after he was tapped for the role as part of a deal in August to settle a drawn-out power struggle between the company’s controlling shareholder and its board and management team.
On Wednesday, the company halved its dividend and said it would soon tap debt markets to shore up its near-term finances. It also said it was no longer seeking to sell a minority stake in Paramount Pictures, a controversial proposal championed by former CEOPhilippe Dauman as a way to raise much-needed cash.
In addition, Viacom said it is taking a $115 million write-down on its Paramount division because of the “expected performance of an unreleased film,” which it didn’t identify. Analysts believe the film to be “Monster Trucks,” set to be released in January.
“It was pretty clear what needed to be done,” said one person familiar with the matter. “The board decided to do it all now, and have a restart of sorts moving forward.”
Taken together, the moves represent a new direction for the media giant in the wake of the settlement with National Amusements, through which Sumner Redstone controls an 80% voting stake in both Viacom and
CBS Corp.
Viacom’s board, which includes Mr. Redstone’s daughter, Shari Redstone, is now on the clock either to find a long-term leader to set the company on a fresh path or a temporary caretaker if a long-speculated merger with CBS is to be pursued.
While a CBS merger faces plenty of hurdles, finding an experienced CEO might be complicated by concerns that such a combination is in the works.
As part of a settlement hashed out with National Amusements in August, five new directors joined Viacom’s board, and Mr. Dooley, a three-decade veteran of the company who was chief operating officer at the time, was tapped as interim CEO through the end of September.
It wasn’t until after last week’s board meeting—where decisions were made about the financial changes—that Mr. Dooley notified directors of his decision to leave, people familiar with the matter said. In a news release, Mr. Dooley said it was a “difficult decision.”
One of the reasons Mr. Dooley is exiting is because he didn’t feel the CEO role under the current board has the authority required to move quickly enough, said a person familiar with the matter. Mr. Dooley was once considered a contender for the full-time CEO job.
In a filing Wednesday, the company said he would receive $4.4 million to stay on for the extra two months. That is in addition to the three times his salary and target bonus—about $57 million in total—he is entitled to, per his contract, if he no longer reports to Mr. Dauman and isn’t offered the CEO job.
Viacom hasn't hired an
executive-search firm, according to people familiar with the matter, but intends to conduct a full search of both internal and external candidates.
Analysts have floated outside contenders including Jeffrey Katzenberg, the former DreamWorks Animation SKG Inc. CEO, and Tom Staggs, the former Walt
Disney Co. chief operating officer. A person close to Mr. Katzenberg said he isn’t interested in the position. Mr. Staggs’ employment terms with Disney included a noncompete clause that would likely make it difficult to woo him in the next several months, a person familiar with the situation said.
Current Viacom executives being floated for the role include Bob Bakish, CEO of Viacom’s international channels, said two people familiar with the matter. A spokeswoman for Mr. Bakish declined to comment.
The leader that many Wall Street analysts would like to see atop Viacom is CBS CEO Les Moonves, as part of a reunification of the two Redstone-controlled media behemoths that split in 2006. People close to Ms. Redstone say that she is interested in such a scenario, though other people close to the matter say it isn’t actively being pursued.
When asked about a possible Viacom deal at a conference last week, Mr. Moonves told investors the company is “not in active discussions for anything like that.” People close to CBS have indicated that they are doubtful a deal with Viacom could be structured in a way that adequately rewards CBS shareholders.
At Viacom, profits have been falling due to a series of flops from Paramount and a decline in ratings at the company’s cable networks, which include MTV, Nickelodeon and Comedy Central. But the financial situation is even more troubled than previously thought. The company gave earnings guidance for its fiscal fourth quarter that was well below analyst expectations, in part due to the film write-down, as well as severance payments.
“Viacom’s fundamentals are clearly worse than we had expected,” wrote Tom Eagan, an analyst at the Telsey Group. Michael Nathanson, an analyst at MoffettNathanson, described the company’s current fiscal year as “heinous.”
Viacom, which has $12.4 billion in debt, has been under pressure to raise cash and improve its operating performance or risk a credit rating downgrade. While cutting the dividend to 20 cents a share will free up more than $300 million in cash annually, credit analysts have said that won’t be enough to maintain Viacom’s rating without improvements in TV ratings and ad sales.
—Joshua Jamerson and Shalini Ramachandran contributed to this article.
