One week after securing a carriage deal with Mediacom Communications Corp., a number of employees of Rainbow Media Holdings Inc.'s Mag Rack video-on-demand service were handed pink slips.
While it's unclear how many employees were laid off last week, most of the cuts came from the company's programming and production departments.
Sources said the changes were the result of Rainbow's decision to use 'third-party' entities to program its VOD service. None of the service's nearly 40 magazine titles — most of which had been produced in-house — will be eliminated, sources close to the situation said.
Sources also said the layoffs are not related to the ongoing AMC accounting scandal.
"Rainbow has made a strategic business decision to use third-party entities for the development and production of original content for Mag Rack's on-demand service, which has resulted in a small reduction of staff," according to a Rainbow statement.
C.J. Cornell, CEO of Chaos Media Ventures — like Mag Rack, an aggregator of original VOD content — said he knew the cuts were being considered. "They've been pursuing content providers for some time to bring in some new relationships," he said.
Asked if any third-party or independent content makers had done a deal with Mag Rack, Cornell replied: "No, and I hope not. If we did, it would be a loss for us."
Rainbow late last month announced a distribution pact with Mediacom, which will place the service in its VOD-enabled systems beginning Aug. 31.
The service also has distribution deals with Insight Communications Co. Inc., Charter Communications Inc. and Rainbow parent Cablevision Systems Corp.