Oxygen Gets Cash, Trims Spending12/10/2000 7:00 PM Eastern
NEW YORK -On the heels of securing a $100 million cash infusion from Paul Allen's Vulcan Ventures Inc., Oxygen Media last week did some belt- tightening on the online side of its business.
Flush with its latest round of funding, Oxygen laid off roughly 10 percent of its employees in an effort to streamline its Web businesses, a sector that has fallen out of favor with Wall Street. In addition to cutting 65 staffers, Oxygen is closing its Seattle office and will also reorganize and consolidate its current Web content.
The roughly one-dozen sites are to be combined under four major "brands" or entrance points: Oxygen.com, Young Audiences, Oprah and Thrive.
As part of the online realignment, Oxygen-which has denied speculation that it is up for sale-is consolidating its New York City operations.
It will "cut 44 full-time and 21 part-time employees, which represents less than 10 percent of our staff," Oxygen Media chairman Geraldine Laybourne said in a prepared statement.
The 65 Oxygen employees losing their jobs are located across the country, including Seattle and New York. The Seattle office has 25 to 30 staff members who have been asked to relocate to New York.
Oxygen's cutback announcement came just one day after the online and cable-network company secured another $100 million from software billionaire and cable operator Allen's Vulcan Ventures.
"The recent $100 million investment by Vulcan Ventures, a company that intimately understands our business, is a powerful vote of confidence in Oxygen, and combined with our online reorganization, keeps us on plan for profitability," Laybourne said. "We continue to believe that the Internet is made for women and that our future is built on the convergence of both TV and online."
Oxygen had received $100 million from Vulcan back in June of 1999, prior to its launch.
In a prepared statement, Vulcan president William Savoy said, "The Oxygen management team has consistently delivered on their business plan in an increasingly difficult market."
Vulcan's second $100 million round of funding to Oxygen included some caveats, according to a cable-industry source. One of those requirements was that Oxygen hire a chief financial officer and impose some stricter financial controls, the source said.
An Oxygen spokeswoman maintained that the company, whose cable network at present is in just over 12 million homes, has been looking to hire a CFO for some time now.
With the second infusion from Vulcan, Oxygen has now raised just under $400 million.
One source said the company also has secured a second, smaller cash infusion, in the neighborhood of $25 million to $50 million.
Oxygen's roster of investors includes ABC Inc., America Online Inc., Oprah Winfrey's Harpo Entertainment Group, LVMH Moet Hennessy Louis Vuitton and veteran TV producers Marcy Carsey, Tom Werner and Caryn Mandabach.
Like other Internet companies, Oxygen's valuation has taken a nosedive, sources said. Once valued at $1.3 billion, the company is now valued in the $500 million to $600 million range, sources said.
With respect to Oxygen's four new consolidated Web "brands," the site that has been dubbed "Young Audience" in-house, but doesn't yet have a formal title, will target women aged 18 to 24-. "Thrive" is Oxygen's popular health site. The content from some of the sites that Oxygen is scrapping, such as Moms Online and ka-Ching, will be available within the new four Web destinations.
At the Western Show, Oxygen unveiled its second-season programming lineup, which includes original fare that's more entertainment-oriented, rather than informational. The network even acquired Xena: Warrior Princess
to add to its schedule-a move that raised eyebrows among some cable operators.