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Viacom won't sell Paramount stake; interim CEO leaving
[NEW YORK] US media giant Viacom announced Wednesday that it was shelving a plan to sell a stake in Paramount Pictures and that interim chief executive Tom Dooley was stepping down.
Viacom, which owns Nickelodeon, MTV and other networks, said it abandoned the Paramount sale "in order to consider all options available to the company."
The move had been favoured by former chief executive Philippe Dauman and opposed by Viacom vice chair Shari Redstone and her father, Summer Redstone, a component of a power struggle that engulfed the company for months.
In August, Viacom and Dauman reached an agreement in which Mr Dauman agreed to exit the company for a reported US$72 million in severance.
The August agreement also installed Mr Dooley, who said in a Viacom statement that opting to exit was a "difficult decision". Mr Dooley's departure follows his recent presentation of his strategic plan to the board, "so it could be assumed that his plan was either not well received, or he did not feel he would receive the necessary support to enact it," RBC Capital said in a note.
Mr Dooley's imminent departure "will leave investors worried about the next chapter in corporate development and if/when/how Viacom can make a meaningful turnaround," RBC said.
It added that the absence of a chief executive will fuel talk that the company could merge with CBS, in which Summer Redstone also holds a large stake.
Viacom gave no details about a successor to Mr Dooley beyond saying that he agreed to stay through November 15 to "facilitate an orderly transition".
Viacom meanwhile also cut its dividend in half to 20 US cents per share and slashed its fourth-quarter earnings forecast to 65-70 US cents per share, below the 89 US cents projected by analysts.
The cut in the earnings projection was due to a charge of US$115 million related to "the expected performance of an unreleased film," Viacom said.
Shari Redstone, who has assumed a greater leadership role from her ailing 93-year-old father, said the moves were needed to better position the company.
"While there is more work to do, the actions announced today are an important first step towards realising the value of Viacom's exceptional assets and positioning the company for the future," she said.
Shares of Viacom fell 0.6 per cent in midday trade to US$40.26.