Wave of Job Cuts Follow Mergers and Downturns

By LINDA MOSS and JEFF BAUMGARTNER -- Multichannel News, 1/29/2001

The fallout from several major media mergers-as well as the dot-com downturn and ad-sales pullbacks-was felt throughout the cable industry last week, and left an avalanche of pink slips in its wake.

More than 3,000 layoffs are slated at AOL Time Warner Inc., MTV Networks, data provider Excite@Home Corp. and cable-equipment vendor C-COR.net.

Lucent Technologies Inc., in a layoff league of its own, announced plans to cut up to 16,000 jobs. And a published report in Business Week said AT&T Broadband is planning to cut some 2,000 of its 53,000 jobs as it gets its books in order prior to spinning off as a separate stock. AT&T spokesmen declined to comment Friday.

AOL Time Warner wielded its corporate ax last week and said roughly 2,000 employees would lose their jobs. Those cuts-750 of which involved online service provider America Online Inc.-come in addition to the 400 jobs severed at Cable News Network, where heads started to roll last week.

"It was like walking through a funeral parlor," one source said of the mood at CNN's New York office.

All told, AOL Time Warner is trimming about 3 percent of its 85,000-member global workforce.

The AOL Time Warner job consolidation will also affect Turner Broadcasting System Inc., as well as Time Inc., Warner Bros., New Line Cinema and Warner Music. Although one published report put the TBS Inc. layoffs at 100 jobs, neither Turner or AOL Time Warner would comment on specific numbers.

"We are streamlining our operating structure, which has resulted in some staff reductions and attrition in various departments across the company," a TBS Inc. spokesman said.

Among those getting their walking papers were Douglas Orr, senior vice president of the Western division of Turner Network Sales; Howard Schemer, vice president of ad sales for the Southern region; and Doug McGinnis, senior vice president of business development.

CUTS HIT TNN UNIT

AOL Time Warner was just one of several companies sending workers to the unemployment line last week. Reflecting the impact of yet another merger-Viacom Inc.'s decision to combine MTV Networks and CBS Cable-MTVN will lay off 125 employees. Most of those affected are staffers at TNN: The National Network in Nashville, Tenn.

On the Internet-technology side, Lucent and Excite@Home reported their planned job cuts.

"Yes, we have the fallout of the recent acquisitions," said Mike Goodman, a senior analyst at The Yankee Group. "Where there's overlap, there's going to be cuts made."

AOL Time Warner stressed that its layoffs would eliminate redundancy in corporate and online operations, and that the increased efficiency would bolster the bottom line.

"In no way are we cutting into the muscle of the company," an AOL Time Warner spokesman said. "We need that muscle to grow and to compete."

With its layoffs under its belt, AOL Time Warner will meet with analysts to discuss its earnings this Wednesday, Jan. 31.

"They wanted to make it clear that they are making the changes necessary to meet our projections," one AOL Time Warner source said.

Added Goodman: "A lot of these cuts are in the interactive divisions that weren't doing well. You either have to increase revenue or cut costs. These companies are being held to overly aggressive forecasts. They're paying the piper now."

In addition to the 750 cuts at AOL Inc., which include 300 in Dulles, Va., the cutbacks include: 400 layoffs at Time Inc.; 100 jobs at Warner Bros.; 600 jobs at Warner Music; 100 posts at New Line Cinema; and 100 jobs in AOL Time Warner's corporate offices.

In addition, AOL Time Warner is looking to sell its Warner Bros. retail stores. Those shops will be shut down; if the stores aren't sold, 3,800 employees will lose their jobs.

HBO and Turner declined to comment on whether they had imposed a hiring freeze. But Time Warner Cable denied it had any such freeze in place.

"We have no layoffs here and no job freeze and no job losses by attrition," Time Warner Cable spokesman Mike Luftman said.

At CNN, the layoff casualties included Rick Salcedo, senior vice president of marketing and creative services; Los Angeles-based Showbiz Today anchor Jim Moret; Gene Randall; Sonia Ruseler; Carl Rochelle; Chris Black; Bob Beard; Greg LaMotte; Greg Lefevre; Cynthia Tornquist; Dan Ronan; Bill Tucker; Graylian Young; and CNNfn's Tony Guida. Perri Peltz, a contributor to CNN NewsStand, resigned.

Some of those leaving CNN, such as Moret, were offered other assignments but opted to turn them down.

Al Primo, a news consultant and the creator of the Eyewitness News format, noted that Rick Kaplan, who exited as CNN's president this summer, had made a concerted effort to recruit marquee names and higher-priced talent to the all-news network. Some of those people were among those let go.

Referring to Guida, for example, Primo said: "He's a very accomplished guy but he's probably a high-priced guy, because he's so experienced."

The Yankee Group's Goodman called the CNN layoffs "the next step in a progression of steps.

"They have tried to change the news focus," he said. "If nothing else, it will help their bottom line. It is sort of a short-term answer. The question is, does it really have any effect on the underlying issues?"

The TNN layoffs, which represent 35 percent of MTVN's Nashville workforce, come as the programmer moves to make New York the new base for the former The Nashville Network. The laid-off workers will leave the company during the next six months.

The layoffs mark the second round of job cuts following the consolidation of MTVN and CBS Cable. Forty-three people were fired in Stamford, Conn., last June.

"Given TNN's new national position and programming focus, it will now be based in New York, allowing the network to take full advantage of MTV Networks operations and resources here," MTVN said in a prepared statement.

MTVN is repositioning TNN from a country-music service to a "pop entertainment network." CMT: Country Music Television will retain its country-music format.

The Nashville layoffs involve employees who work for TNN and the TNN section of Country.com. TNN's online operations will relocate to New York and country.com will pertain exclusively to country music.

MTVN officials stressed that CMT's headquarters and operations will remain in Nashville.

EXCITE TRIMS SAILS

Excite@Home Corp. said last week it will trim roughly 8 percent, or 250 employees, from its work force-a move dictated by a "soft advertising market," company chairman and CEO George Bell acknowledged last week during a fourth-quarter earnings call with analysts and reporters.

Excite@Home reported it had almost 3 million cable-modem subscribers at the end of 2000. It expects that figure to rise to between 5.2 million and 5.5 million this year.

The staff cuts will affect Excite@Home's content-related areas, with "minor reductions" in corporate staff and other operations. Its broadband-access business and the staff that supports broadband-network operations will be left unaffected.

Bell said Excite@Home had "too many moving parts." It will exit the electronic-commerce hosting business and put Enliven, its "rich-media" advertising unit, on the block.

Those moves will cause the company's advertising revenue to drop from between 30 to 35 percent this quarter, Bell said.

Bell hinted that more cuts could be on the way.

"This company has always strived to do more. Now we're going to strive to do less," Bell acknowledged. That means Excite@Home will "discontinue, sell or get out, period," from its unprofitable operations or units that do not leverage "our broadband position."

Broadband-equipment companies have also suffered lately, thanks to cable operator order delays or outright freezes.

Those delays caused C-COR.net to reduce 15 percent of its workforce. It handed out pink slips to about 300 employees in a restructuring announced Jan. 18. Through acquisitions and regular growth, the company's employee roster had risen 70 percent since mid-1998, chairman and CEO David Woodle said.

Most affected employees worked in C-COR.net's three RF (radio-frequency) amplifier and fiber-optics manufacturing facilities; the greatest impact was felt at the company's State College, Pa., location, a company spokeswoman said. The other two facilities are in Tipton, Pa. and Tijuana, Mexico.

C-COR.net also discontinued its help-desk services, transitioning those elements to High Speed Access Corp.

Cable-operator orders have not been consistent, either. While some have not slowed down at all, others have spaced their orders over two years instead of 12 months. Some are in a solid hold pattern.

"There is no consistent answer," Woodle said. "I think everyone is consistently seeing a rapid decline in demand as customers have put some hold on capital spending rates and try to figure out their current situation."

C-COR.net is indeed far from alone. Following lackluster first-quarter numbers, Lucent's huge job cuts are part of a plan to reduce annual expenses by about $2 billion.

Lucent's bloodletting will center on its telecommunications-equipment division. The company also plans to outsource a good chunk of manufacturing jobs.

Earlier this month, telecommunications equipment manufacturer ADC Telecommunications Inc. announced it had fired 400 of its 2,300 systems integration workers.