Posted on 12/07/2008 2:59:23 PM PST by abb
Call it the big shrink.
Citing the effects of a recession that's prompting marketers to trim budgets and the number of media outlets they work with, media companies are shedding jobs at a furious rate. But the deep cuts they're making are as much about these conglomerates shedding their old media models as they are about the economy.
Viacom and NBC Universal swung the ax last week, eliminating 850 and 500 jobs, or 7% and 3% of their work forces, respectively. Add that to 600 job cuts at Time Inc., 1,500 at Yahoo, 1,800 at Gannett, hundreds at CBS's radio and local TV divisions, and incremental cuts just about everywhere else, and big media is getting a whole lot smaller.
How small? The media industries have shed more than 30,000 jobs in 2008, according to an Ad Age analysis of Department of Labor employment statistics and news reports. That's about 3.5% of the total media work force of 858,000. Since the bubble-inflated high-water mark in 2000, media has lost more than 200,000 jobs.
The latest round of restructuring is driven by two concurrent forces: On the one hand, there's a crippling recession that is crushing marketing budgets; on the other hand, there is the ongoing effect of the fragmentation of audiences.
Already thin payrolls The bloodletting last week came at two of the leaner media conglomerates: Viacom had about 13,100 full- and part-time employees before the cuts, and NBC Universal had 15,000. That's compared with much larger head counts at two companies that have not announced layoffs: Walt Disney Co., which has 150,000 employees, and News Corp., with 64,000.
CBS, which has been reducing its head count throughout the year, had nearly 24,000 employees at the beginning of 2008. Time Warner had 86,400 employees before the cuts at Time Inc.
When he announced his intention to cut $500 million from its 2009 budget in October, NBC Universal CEO Jeff Zucker told staff in a memo: "We have no choice but to respond quickly to the external economic forces that are affecting the entire world economy."
But privately, some executives explained, the recession is giving big media cover to undertake Detroit-like restructuring as the business struggles to shed the remaining vestiges of broadcast-level staffing in favor of a lower-cost model.
"In this wave of media layoffs, management teams are placing the blame on the shoulders of the American recession without acknowledging that even in a strong economy, you would still have major challenges as they shift from old media to new media," said Barclays Capital media analyst Anthony Di Clemente.
Drop in spending That's not to say the media industry isn't facing a significant drop in marketing spending. WPP's media-buying unit Group M is predicting a 3.9% fall in U.S. ad spending in 2009, according to estimates to be released this week. That's after no ad spending growth from 2007 to 2008.
Fitch Ratings is predicting the weakest year for advertising since 2001. BMO Capital Markets is predicting a 2% drop in U.S. advertising in 2009 but a deeper 5.4% slide in spending on measured media, with radio down 7.6%, broadcast TV down 8.7%, newspapers down 12.1% and magazines down 8.2%.
What's unknown is whether media's losses are permanent and whether the companies will simply emerge as smaller businesses once the dark economic clouds dissipate. "It's very possible that after the cyclical decline we are going to experience that we will come back. The question is: Do we come back at the level of 2007 or 2008?" said Alan Gould, analyst at Natixis Bleichroeder.
Of all big media, he said, he believes Disney has the best chance to rebound, given that only 20% of its revenue comes from advertising.
One media sector that looks destined for permanent shrinkage is newspaper and magazine publishing. Time Inc.'s current round of layoffs was sparked by the recession, for example, but the downsizing has been under way for years. Chairman-CEO Ann Moore has laid off employees in waves since December 2005, trying to streamline an operation that overstaffed in boom times. Those magazine jobs aren't coming back.
Permanent changes Rodale, the publisher of magazines including Men's Health and Runner's World, chopped its staff 10% when it cut 111 jobs last month. Under pressure from the recession, it figured out it could outsource back-office areas such as IT and operations. Rodale is not going to bring those jobs back.
On Dec. 5, Newsday told its employees it would cut another 100 jobs, or 5% of its work force.
The good news for media companies is that consumers are spending more time in front of screens than ever before. Household TV viewing reached 142 hours a month in 2008, five hours more than last year, according to Nielsen.
"Collectively, media will continue to be strong," said Group M Chief Investment Officer Rino Scanzoni. "We are looking at a generation of people that have grown up with multiple media that are now becoming major consumers. Viewing has increased; it's just fragmented over more pieces. It's about weaving those pieces together to accomplish your advertising objectives."
~ ~ ~ Contributing: Andrew Hampp, Nat Ives
ping
Die already.
Sweet.
Good news, since my Bills are representing Buffalo horribly up in Toronto.
1) People who are officially unemployed, as defined by the Bureau of Labor Statistics, or
2) Illegal aliens with jobs that Americans don't want?
I’m waiting for a remake of Gold Diggers of 1933. “We’re in the money...”
It might be the only industry where I don’t sympathize with those who’ve been laid off.
If you’re in the media, then consider that there is one industry that does not have to worry about losing their jobs, or receiving a pay cut. Politicians.
Here you go, for your Media Death Watch, breaking from Wall Street Journal:
Tribune Company prepares for bankruptcy.
This Week!
http://online.wsj.com/article/SB122868944355686385.html
yitbos
I haven’t bought a newspaper since Clinton was impeached and they acted like that was a bad thing. I’m waiting for the Minneapolis Red Star Tribune to declare bankruptcy. It sounds like they may be close. Heh!
LOL!
Reminds me of a saying one of my bosses used to use; 'don't tell me about the labor, just give me the baby'.
Will Brokaw Couric et al offer to work for $1 to save jobs of the little people...?
WHOA that more to the story
I'm calling BULLSH!T here, out loud. You can't watch the @#@$$ television any more without being annoyed to death with ads. I tried to watch the two hour episode of "24" a while ago, and was literally unable to follow the plot line for all the commercials. They would show four minutes of the program, followed by three minutes of commercials. I finally turned it off in disgust and went to read some history. I can't imagine what it would be like to watch TV if the media swine got the full ad buys they really want.
Chicago Public Radio lays off 11
Chicago Public Radio, the parent of WBEZ-FM 91.5,chicagopublicradio.org, Vocalo.org and WBEW-FM 89.5 FM, is laying off around 9 percent of its staff in response to a projected $1.5 million revenue shortfall.
The budget crunch is the result of a decline in individual donations and less growth than anticipated in corporate gifts....
http://newsblogs.chicagotribune.com/towerticker/2008/12/chicago-public.html
Only time I pick up the SF Chronic is literally when it is discarded in the corner of my gym.
1. fish wrap
2. parrot cage liner
Bad vulture on handicapped space
Does that poor bird realize that people don’t need it at LA Times anymore
Without Bill Clinton around, the spreading of lies and BS just doesn't pay like it used to.
Yeah, getting beat by Miami at home in December is embarrassing...but then I remembered that it was in the dome at Toronto.
Still, it’s not fun being at the bottom of the division. :-(
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