The dismal economy finally caught up to the cable industry last week, with several companies trimming employee rolls, and more expected to follow.
Media companies have largely held back on the drastic workforce reductions that other sectors have endured as the economy has spiraled downward during the past few months. Last Friday, the U.S. Department of Labor released its November unemployment figures, with 533,000 people losing their jobs during the month. It was the worst such monthly decline since December 1974.
But last week, the media sector could hold out no longer, with a flood of layoff announcements from Viacom, AT&T, NBC Universal and others. Those announcements come on the heels of earlier job cuts at Comcast (300 in its East division), Cox Communications (460 jobs) and Time Warner Inc. (1,000, mainly in its film and publishing divisions).
Time Warner Inc.
AT&T was the big loser last week, announcing 12,000 job cuts, affecting about 4% of its workforce, because of economic conditions. That was followed by Viacom, which said it would shave 850 workers from its payroll and freeze executive salaries in 2009.
NBC Universal said it would pare 500 people from its workforce as part of a plan unveiled in October to slash $500 million, or 3%, from its operating budget. Charter Communications said last Friday that it would let go about 75 employees in a restructuring that would reduce its operating divisions from three to two.
The Viacom layoffs have been rumored for months, although many believed that the blow would be less severe. Some analysts had predicted that Viacom would lay off between 300 and 400 people. Instead, it shed about 7% of its total workforce, or 850 people.
Those layoffs will come across the board, from both domestic and international divisions, said Viacom executive vice president of corporate communications Carl Folta. Folta also said the company is not breaking down how many layoffs will occur at each unit, but said that the number of lost positions will be proportional to each division’s total size.
“You would imagine that MTV Networks, as the biggest employer in the company, probably had more than Paramount or BET,” Folta said. Viacom also said that it will write down certain programming and other assets, but did not identify them.
Folta said the company will likely release more details on the write-downs in a future filing with the Securities and Exchange Commission. For now, he said, the assets would reflect “original, acquired and across multiple channels that don’t fit the demographic anymore or have been taken off the air.”
The restructuring and write-down together will result in a pre-tax charge of $400 million to $450 million, or between 42 cents and 48 cents per diluted share, but should save the company between $200 million to $250 million in 2009.
At NBCU, the layoffs will also be across the board, spanning its movie studios, broadcast television unit and cable networks.
NBCU chief Jeffrey Zucker foreshadowed the cuts back in October, when he told employees in a memo that “… it is increasingly clear that the worldwide economic slowdown will continue into next year. The leadership team of the company agrees that we must take steps now to prepare for these new economic realities. As a result, all of our business leaders are being asked to cut their spending projections for 2009.”
Pali Research media analyst Rich Greenfield said that the rotten state of the economy makes it inevitable that other media companies will have to shed jobs. He added that even the companies that appeared to have avoided large layoffs so far have been eliminating positions on a fairly regular, yet smaller, basis.
“Companies are cutting across the board,” Greenfield said. “We’ve seen continued cuts throughout the year and I think that will accelerate into 2009.”
Currently, no company is willing to state that no additional layoffs are planned, and most will only look out as far as the end of the month. News Corp. senior vice president of corporate affairs and communications Teri Everett would not comment directly on any workforce adjustments the media giant may or may not have planned, instead referring to a comment made by chairman Rupert Murdoch during the company’s earnings conference call last month.
“We’ve instituted stringent cost-cutting measures across all our businesses to operate even more efficiently,” Murdoch said on the call. “We’re managing down our already lean headcount wherever appropriate.”
Media giant Time Warner Inc. laid off about 1,000 people as part of an overall corporate restructuring, the consolidation of its film studios and the restructuring of its Time Inc. publishing unit. Time Warner officials do not anticipate any more layoffs this year.
At Time Warner Cable, spokesman Justin Venech said, “We have not made any layoff announcements and we currently don’t have any plans.”