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Media Job Losses Mount With Viacom, NBC Slashing Jobs


Job losses in the media industry piled higher Thursday with Viacom Inc. (VIA) and General Electric Co.'s (GE) NBC Universal slashing roughly 1,350 positions as the recession adds another challenge to an industry already wrestling with the rise of the Internet.

Viacom said it's cutting 7% of its work force, or 850 jobs, and will take up to $450 million in fourth-qurter asset writedowns. The announcement fulfilled months-long speculation about possible layoffs at the Sumner Redstone-controlled company as it deals with declining ad sales and lower movie revenue.

NBC, meanwhile, cut 500 workers, or 3% of its staff, according to an internal source, as part of its ongoing efforts to reduce its 2009 operating budget by 3%, or $500 million.

Those were just the latest pink slips to be handed out in the media industry as executives scramble to manage costs amid a dramatic slowdown in the advertising market. With Christmas three weeks away, companies that want to lower headcount before the end of the year are acting now to avoid delivering bad news closer to the holidays.

Observers expect more layoffs over time as the media industry evolves away from traditional media like newspapers, magazines and radio, and embraces newer media like the Internet.

"The media is an industry in transition in the midst of a tough slowdown, and there's potential for additional job cuts, but they have to be done without hurting the fabric of these companies," Barrington Research analyst James Goss said. "The industry we have in a couple of years from now will be a lot different from the one we have going into the recession."

Time Warner Inc. (TWX) has laid off roughly 1,000 workers this year, with about 600 positions cut at its struggling magazine publishing empire, Time Inc. News Corp. (NWS), the publisher of this newswire, has laid off workers at some divisions of its global media empire, but spokeswoman Teri Everett declined to provide details.

"We've instituted stringent cost-cutting measures across all our businesses to operate even more efficiently," Chief Executive Rupert Murdoch said on a recent conference call. "We're managing our already lean headcount wherever appropriate."

A Walt Disney Co. (DIS) spokesperson was unavailable for comment, but an internal source speaking on condition of anonymity recently said job cuts are expected at its broadcast network, ABC.

CBS has been reducing staff at its television, radio, publishing and outdoor advertising operations for months. The merger of the two major players in satellite radio to form Sirius XM Satellite Radio Inc. (SIRI) has resulted in layoffs there, and the newspaper publishing industry is in turmoil, with editorial staff cuts at major publishers like Gannett Inc. (GCI), Tribune Co., McClatchy Co. (MNI) and New York Times Co. (NYT).

NBC slashed jobs throughout its portfolio, including positions at its business cable news network, CNBC.

The media industry is not alone in shedding workers as the global financial crisis takes its toll on the U.S. economy, but advertising is one of the hardest hit sectors as businesses ratchet back their spending.

Viacom's Woes


Viacom has struggled with double-digit ratings declines at its key cable networks, like MTV, VH1 and BET.

"We believe that Viacom's ratings weakness will continue to exacerbate the macro-related ad market softness," Credit Suisse analyst Spencer Wang said in a recent research note.

Also, Viacom's controlling shareholder, Sumner Redstone, has been caught up in a credit crunch at his private firm, National Amusements Inc. The firm's $1.6 billion debt load is tied to the value of Viacom and CBS Corp. (CBS), the two media conglomerates that Redstone controls through holdings at his firm. Those values dropped sharply in October's historic sell-off in the U.S. stock market, and Redstone was forced to sell $233 million worth of non-voting shares in both companies as a result.

Currently, Redstone is negotiating with lenders over his firm's credit position in a situation that Wang called "an overhang" for Viacom shares. Viacom spokeswoman Kelly McAndrew said there's no connection between Redstone's debt problems and Thursday's announcement.

"We're taking this action, in part, to ensure that we're on solid footing when market conditions improve, and we can take full advantage of every opportunity," McAndrew said.

Viacom shares recently dropped a penny to $16. The stock is down 59% since splitting from CBS at the beginning of 2006.

The company's job cuts are taking place broadly across its portfolio of media properties both in the U.S. and abroad. The write-downs and restructuring will result in fourth-quarter charges between $400 million and $450 million, or 42 cents to 48 cents a share, as Viacom looks for 2009 pretax savings of $200 million to $250 million.

"We are moving rapidly to adapt to the challenges presented by the current economic environment," Chief Executive Philippe Dauman said.

Ad sales have been falling recently for Viacom. The company also reported lower theatrical revenue in the latest quarter, further pressuring results, and a group of financial firms sued Paramount this week alleging that they stand to lose their $40.1 million investment because the film studio made misrepresentations in a movie-financing deal.

Nonetheless, Dauman said the company has substantial cash flow and a strong balance sheet, allowing it to look for opportunities amid the market turmoil and focus on long-term growth.


-By Nat Worden, Dow Jones Newswires; 201-938-5216;

(Kerry E. Grace contributed to this report)


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Corrected December 4, 2008 18:07 ET (23:07 GMT)

(END) Dow Jones Newswires

12-04-08 1253ET

Copyright (c) 2008 Dow Jones & Company, Inc.


The announcement fulfilled months-long speculation about possible layoffs at the Sumner Redstone-controlled company as it deals with declining ad sales and lower movie revenue.




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