The deceleration of the economy and the utter implosion of both the banking and auto industries has officially tipped the dominoes of misfortune to the media industry. The flow of advertising dollars has shrunk. Car dealerships are spending less to promote their products. Banks are buying fewer ads. Historically big spenders aren’t spending. Even celebrity endorsements are falling victim. So…this year, instead of holiday bonuses, many tech and media companies are handing out pink slips.
It’s hard to say whether all the cash conservation and restructuring is truly necessary or if some is just opportunistically timed to squeeze the write-offs and one-time charges into 2008 fiscal year accounting. For a lot of people, that’s irrelevant. This season’s greetings are anything but cheery.
Thursday, it was media giant Viacom (VIA.B) that lowered the hatchet. The parent of MTV Networks, Paramount, BET and Nickelodeon announced a workforce reduction of approximately 7%, or 850 jobs. 2009 senior level salaries are also being frozen. The company will take a pre-tax charge of $400 to $450million (equivalent to 42c to 48c per diluted share).
In a memo to staff, CEO Philippe Dauman and CFO Tom Dooley characterized the company’s health as strong but deemed the cuts a necessity. The moves are expected to save Viacom as much as $250m pretax in 2009. (The full text of Viacom’s layoff is reprinted at the end of this article).
Viacom is far from alone in trimming their costs and headcount at this point in the year.
A number of other news brands are cutting “overlap” as they combine online and print operations too.
GE’s (GE) NBC Universal unit has so far cut about 30 ad sales positions as part of a $500m cost cutting plan announced in October. Reports are spreading that as many as 500 more job cuts from across the companies entire media and news operations may be announced next week.
Gathering up some of the other media, technology and entertainment cuts that have been announced since October, the list includes:
•Adbrite – 40 employees, equal to 40% of staff was laid off to trim expenses and allow the ad services company to operate profitably without further funding. (more from Tech Crunch)
•Adobe (ADBE) – 600 jobs axed as software buying slows. (more from the Mercury News)
•AT&T (T) – 12,000 staff or 4% of the company was announced Thursday. (more from Paid Content)
•Comcast (CMCSA) – 300 jobs cut as part of restructuring in eastern division. (AP report)
•Current Media – Al Gore’s media hopeful lets loose 30 staffers in early November.
•eBay (EBAY) – 10% of staff, or about 1,000 jobs cut in early October. (press release)
•Electronic Arts (ERTS) – 6% or near 540 jobs cut in late October.
•Gawker Media – 14% of editorial staff cut in early October from the blog network with rolling layoffs carrying into December (more at Mediabistro).
•iMeem – 25% of staff let go (Metue coverage).
•Jaxtr – VoIP startup lets 13 employees go. (more from Tech Crunch)
•LuLu – the N. Carolina book publishing let go about 20% of staff. (from News and Observer)
•Mahalo – “just under” 10% of staff. (more from Calcanis.com)
•Palm (PALM) – after poor results, an unspecified number of jobs, expected to be large, is put on the block.
•Pandora – 20 out of 140 employees cut from the Internet music site in mid October. (more from the Pandora blog)
•Random House – “minor layoffs” and restructuring announced. (more from WSJ)
•SearchMe – after Sequoia Capital cautioned portfolio companies about costs in this climate, 20% of staff let go. (more from Venture Beat)
•Simon & Schuster – the books division of CBS drops 35 positions including the head of children's publishing (more from International Herald Tribune)
•Sirius XM (SIRI) – 50 jobs cut at the satellite radio service in mid October. (more from Radio World)
•Spot Runner – ad service firm dropping 115 people or about 30%. (more from Tech Crunch)
•THQ (THQI) – reports of four or five studios shutting down. (more from Kotaku)
•Wired.com – the online branch of Wired magazine cuts 10%. (more from CNET)
•Yahoo (YHOO) – at least 10% of staff or 1400 to 1500 jobs were earmarked for “termination” in news delivered at the company’s 3rd quarter earnings call. Details are still pending.
•Zillow – 25% of staff, or about 35 employees, were laid off from the real estate web site. (more from the Zillow blog)
THE VIACOM MEMO
With less than a month until the close of 2008, our entire organization continues to do everything possible to anticipate and adapt to the unprecedented changes affecting all our businesses. We know it hasn’t been easy and we couldn’t be more proud or more appreciative of how you have risen to the challenge.
Even in these tough economic times, Viacom has a strong hand to play. We have a broad stable of outstanding brands, diverse revenue streams and an impressive global footprint, backed up by exceptional financial strength. Added to that we have talented employees, extremely able leaders and a creative ingenuity that runs deep.
Unfortunately, our advantages and best efforts can’t completely protect Viacom from the very serious and broad-based challenges of this economic recession. Viacom’s long-term health will depend on our shared commitment to adapt, to innovate and to make difficult choices. To compete and thrive, we need to create an organization and a cost structure that are in step with the evolving economic environment.
Today, we are announcing a company-wide restructuring plan that includes staffing reductions in all divisions. This will result in a reduction of our worldwide workforce of approximately 7 percent, or about 850 positions. We are also suspending salary increases for the Company’s senior level management in 2009. In addition, after a comprehensive review of our operations, we will write down certain programming and other assets. These three actions will bring us significant cost savings and other efficiencies.
Top managers at every part of the company worked thoughtfully, carefully and compassionately to create a leaner, more focused organization. It was not an easy task, but it was an essential step that will keep Viacom at the competitive forefront today and tomorrow. Department heads and supervisors will provide you with more information about the changes that will be taking place in your division.
Saying goodbye to friends and colleagues is always difficult, particularly when we have shared so much. Those of you who will be leaving should be proud of your contributions, which we will always respect and appreciate. We thank you and we wish you the best.
The true measure of an organization is how it deals with change and overcomes challenges. We know that you are up to the task and that together we will push through the difficulties ahead and go on to even greater achievements.
We truly appreciate your continued commitment and hard work and we thank you for everything you do each day.
Philippe and Tom