Media's pink slip blues
This year's reality is that cornerstones of American business are in deep financial trouble and there's no turnaround in sight
By John M. Higgins -- Broadcasting & Cable, 1/27/2002 7:00:00 PM
Carole Black recently had a fairly attractive job opening: vice president of marketing for Lifetime TV. Like many TV executives eager to "brand" their networks' programming, Lifetime Chairman Black wanted someone with a background in pushing consumer products, preferably with media experience as well. Black figures that, if she had posted the job a year ago, when the ad market was just starting to dip and TV companies were beginning to craft layoff plans, Lifetime would have received perhaps 100 inquiries and she would probably still have had to scrounge to find the right person.
Lifetime was deluged with about 600 résumés for the job. "That's extraordinary for a TV job where you have to have a strong marketing background," Black said. She ended up with exactly what she wanted: a person who had done marketing for Pepsi, had spent several years at CBS/Fox's home-video venture, and had lately been consulting.
The huge competition for a shrinking number of slots, of course, is no surprise to anyone looking for a job in TV and radio in recent months. Networks, stations, producers and syndicators have cut tens of thousands of workers over the past year, battered by what, in some ways, is the worst advertising market in 50 years.
Perhaps the worst news is that the tough job market is caused by more than the recession and could outlast an advertising rebound.
The problems predate the terrorist attacks and the war on Afghanistan by a year. Nobody's simply blaming the disappearance of free-spending Internet companies any longer; that was last year's excuse. This year's reality is that cornerstones of American business, like Kmart and Ford, are in deep financial trouble and there's no turnaround in sight.
Two years ago, TV players could easily bounce over to Internet companies hungry for grown-ups who could help them become serious media companies. That's obviously no longer an option. It's a rare media company that hasn't had to slice from virtually every part of its operation.
"I'm finding it really, really tough," said a former mid-level network manager who has been on the street since spring. "I've had two interviews since Sept 11. It's bleak."
Lamented a former TV-station ad-sales manager, "You can hardly get industry friends to come to the phone, because they know you're out of work and they have nothing to say."
Some of the cuts are simple pruning: slicing a sales force in a down market, trimming technicians supplanted by new automation in local TV production.
Other moves are more drastic. Sinclair Broadcasting is simply eliminating local newscasts at many of its stations, and other broadcast groups are starting to follow suit. After Viacom bought Black Entertainment Television, it quickly cut 25% of the cable network's staff. Eroding ratings prompted CNN to lay off 25% of its 4,000 staffers last winter, although the terrorist attacks prompted the network to reverse some of the cuts.
Last March, Viacom President Mel Karmazin marveled at Walt Disney's announcement that it would lay off 4,000 employees. "I never can understand how companies find themselves in a position where they have so many people they can let go of," he said. "I just don't understand how you operate in that environment."
Months later, Viacom's MTV Networks axed 600 employees, 9% of its work force.
Many jobs are disappearing in structural changes in the business.
Broadcasters are "hubbing" TV stations, running four or five stations in a region out of one central facility and eliminating jobs for station managers and engineers. Station owners can now have duopolies of two large stations, and Fox started cutting news and sales staffs immediately after pairing Chris-Craft's UPN affiliate WWOR-TV New York with its existing WNYW(TV).
Cable consolidation doesn't just shrink the number of system, regional and corporate manager slots. It creates bulk to allow even greater efficiencies. "Charter used to have customer-service operations in 100 systems in the state of Wisconsin," said one cable executive. "Now there are two regional call centers."
"I would think that consolidation is a bigger problem than the economy," said Greg Bannon, former E! Entertainment Television executive vice president of programming, who left the network last summer. "I think what the economy did was give people an excuse to do what would have happened anyway."
Faint signs of turnaround
A few see improvement ahead. Reports from headhunters—who generally fill senior slots—are mildly positive. Bill Simon, head of Korn/Ferry's entertainment practice, said that, for the past two months, some clients have told him they may have assignments to fill starting at the end of January. "I'm counting the minutes," he said.
Media specialists Brad Marks, of Brad Marks International, and Joe Sullivan, of Joe Sullivan & Associates, said that, after a few quiet months, clients have begun giving them new assignments.
Media and Wall Street executives, though, don't see any rebound, and some see more layoffs coming.
"Viacom claims they're going to get 10% cash-flow growth this year on 0% growth in revenue," said Sanford Bernstein & Co. media analyst Tom Wolzien. "How else are they going to do it?"
"Batten down the hatches," advised Karen Lincoln, a veteran TV station ad sales executive whose résumé includes Paxson, New World Television and a recent stint as COO of Hispanic Television Network. "Prepare for kind of a tough year. Right now, no one knows if they're doing a good job or a bad job. When the market's down 20%, you can't tell."
The short-term numbers are sufficiently scary. Disney executives said revenues at ABC Network dropped about $1 billion in 2001, to $3.3 billion. E.W. Scripps reported that sales dropped 23% at its TV stations in the fourth quarter while cash flow plunged 43%. Clear Channel's radio revenues are estimated to have fallen at a more modest 7%-8%.
Morgan Stanley media bond analyst David Allen estimates that broadcasters saw a 10.7% drop in ad sales last year, cable networks dropped 10.9% and radio fell 7.4%.
And he sees no recovery this year. His forecast of growth in total spending on all media, including print: 0%. Broadcast should drop another 2.5%, cable another 5.2% and radio less than 1%.
"After last year, flat feels pretty good," said one ad-sales executive for a TV broadcast group whose revenues fell 18%-20% last year.
Even though ad sales are particularly vulnerable in a recession, media's layoff numbers are not as savage as those of other sectors.
Challenger, Gray & Christmas, an outplacement firm that carefully tracks job cuts, said media companies announced layoffs of 43,500 employees last year. That's about 2% of all layoffs the firm counted. The number doesn't include Internet companies but does include newspaper and magazine publishers.
That's not out of line with media companies' presence in the overall job market, accounting for about 2.5% of 131 million full-time workers in the U.S. And, according to Challenger, Gray CEO John Challenger, other sectors were far worse, notably telecommunications (317,000 layoffs) and computer manufacturers (168,000).
(The fewest layoffs last year were in health care, energy, mortgage banking, and, not surprisingly, defense and security companies.)
Still, "media has been taking it on the chin," Challenger said.
Available data indicates that workers at TV stations are suffering the most. The U.S. Bureau of Labor Statistics shows that employment at TV stations fell 2.4%, to 117,400, during the 12 months ended in November. That's an abrupt halt of the unbroken growth of the prior decade, which peaked in 2000 with a gain of 4.6%.
Cable and DBS continue extremely strong, with November employment up 10% over the prior year, to 245,000 employees. The most numerous occupations at those companies are installers and customer-service reps working the phones. While cable operators' basic-subscriber growth has stalled, the introduction of digital cable, high-speed Internet and telephone services generates a lot of truck rolls for installation and service.
And despite the ad downturn and consolidation in radio, station employment there doesn't seem to be affected. November employment was down 0.5%, to 117,400 workers.
The BLS mixes TV networks in with motion picture companies, so detailed stats aren't available.
The human toll
Those looking for work say their lives have become a blend of pursuing the job hunt and coping with the frustration of being out of work or at least underemployed.
"There's definitely downtime," said a former marketing executive looking for a TV gig. "One of the hardest transitions is getting disciplined. It's almost noon, I'm in my PJs and pink fuzzy slippers. I'm trying to keep my mind busy."
A former network manager said coping with friends and family can be difficult. "There's a sense of camaraderie with other people who are out of work," she said, particularly since they're more receptive to networking. But then there are those apparently clueless friends who, for example, still want to meet for dinner at Manhattan's pricier restaurants instead of the cheap Thai place down the block. "Those are the people I am spending less time with."
When Lincoln left the ailing startup Hispanic network, she was enough of a veteran to be able to quickly start consulting, representing small companies in ad sales.
The process is almost—though obviously not quite—as maddening to executives doing the firing. A senior executive at one Viacom cable network said that growing license fees from cable operators and strong ratings means the operation hasn't really been suffering. Nevertheless, the network followed a corporate edict and axed about 10% of its staffers. "We'll be up 10%-15% in cash flow for 2001," the executive said. "It's just not the 30% they were accustomed to."
But there's an upside. "There's a fantastic opportunity to upgrade your talent," noted a senior human-resources executive at one top-five media company. "When everything was go, go, go, some B and C candidates got into the organization. Now I advise weed and reseed, don't rehabilitate. It's an embarrassment of riches."
Linda Levy hopes to be part of those riches. The former Showtime marketing manager is trying to return to TV after going to a promotion firm specializing in marketing by e-mail. "As an optimist, I see, by the end of the first quarter, things will be getting back to normal," she said. Normal means that, "as positions come open, they'll get refilled, which isn't happening now. I don't think MTV is overnight going to hire back 450 employees. But there's always churn."
Meanwhile, Lifetime has another slot open in viewer relations. That kind of entry-level gig—$30,000 or so a year to deal with fan letters and e-mail requests for information—might have generated 200 or so résumés a year ago.
Lifetime has hired a temp to sift through the 1,300 sent in so far.
|The broadcast job market seems particularly vicious because the loss of momentum was so abrupt. TV stations went from growing employment 4.5% in 2000 to cutting 2.4% of jobs in 2001, nearly an 8-point change in direction. Why is cable and DBS employment surging? A huge amount of the workforce is tied to installations, and the rollout of digital cable and high-speed Internet plus continued growth of DBS is creating lots of demand.|
|Source: US Bureau of Labor Statistics. 2001 data only through November
|Cable & DBS jobs|
|Top 10 jobs|
|Job||% of all workers|
| Source: U.S. Bureau of Labor Statistics, Job Growth in Television: Cable Versus Broadcast, 1958–99
|Producers, directors, actors||7|
|Reporters and correspondents||5|
|General managers and executives||4|
|Writers and editors||3|
|Other professionals and technicians||2|
|Job||% of all workers|
|Installers and repairers||21|
|First-line supervisors, product||3|
|All other sales and related||3|
|First line supervisors, administrative||3|
|General managers and executives||2|
|Engineering and related technicians||2|
|The hit list|
|A sampling of job losses in TV and radio since the ad slump began around October 2000|
|Source: Iwantmedia.com, Broadcasting & Cable and company reports
|ABC Family||300, or 50%, after channel was acquired from Fox||Jan. 2002|
|CNN/SI||190 in shutdown||Jan. 2002|
|King World||12||Jan. 2002|
|Home Shopping Net||115||Jan. 2002|
|WXLV-TV Winston-Salem, N.C.||35, after two nightly newscasts canceled||Jan. 2002|
|CNN||30, after canceling four news shows||Dec. 2001|
|TNT||24; folding original programming division||Dec. 2001|
|MSNBC.com||38, or 9%, in another restructuring||Dec. 2001|
|TechTV||130, or 25%, in tech-ad slump||Nov. 2001|
|Grass Valley Group||70, or 10%||Nov. 2001|
|E! Entertainment Television||40, in restructuring||Nov. 2001|
|Discovery Communications||50 in consumer products unit||Nov. 2001|
|WWF||39, or 9%, amid falling wrestling ratings||Nov. 2001|
|Walt Disney||125 Internet, including 25 at ABCNews.com||Nov. 2001|
|PBS||56, or 10%, in restructuring||Nov. 2001|
|CNBC||15; ad and ratings slump||Oct. 2002|
|KSTP/KSTC-TV Minneapolis||24; duopoly created and newscasts eliminated||Oct. 2001|
|MTV Networks||450, or 9%, in broad restructuring||Oct. 2001|
|WWOR-TV New York||9; swept into duopoly with Fox's WNYW-TV||Oct. 2001|
|NATPE||6, as exhibitors cancel bookings for convention||Oct. 2001|
|KOMO–TV Seattle||22, including 10% of newsroom||Oct. 2001|
|Belo Corp.||160 at TV stations and newspapers||Sept. 2001|
|Oxygen Media||80; making deeper cuts in its Web operation||Sept. 2001|
|KDNL-TV St. Louis||47; dropping newscasts||Sept. 2001|
|Excite@Home||500; company scheduled to close in February||Sept. 2001|
|Radio One||12; sets job freeze||Sept. 2001|
|Avid Technology||140||Aug. 2001|
|ACTV||125, about a third of ITV developer's staff||July 2001|
|CBS Marketwatch||40||July 2001|
|Pinnacle Systems||25||June 2001|
|ABC News||125 through buyouts and layoffs||May 2001|
|NBC Internet||300 in closing Internet subsidiary||April 2001|
|Univision||42, including newscaster||May 2001|
|Oxygen Media||35 online workers||March 2001|
|Walt Disney Co.||3%; looking to eliminate 4,000 jobs||March 2001|
|New Urban Entertainment||entire news and programming staff||May 2001|
|CBSNews.com||20, or 25%||April 2001|
|WHLT-TV Hattiesburg, Miss.||13||March 2001|
|KATV-TV Little Rock, AR||20||March 2001|
|Christian Broadcasting Net||50, or 5%||March 2001|
|TNN||125; new owner moved HQ to New York||Feb. 2001|
|Emmis||120 from its 15 TV stations||Feb. 2001|
|Sinclair Broadcast Group||147, or 4%, from stations||Feb. 2001|
|Oxygen Media||30 in overhaul of teen talk show||Feb. 2001|
|NBC||560, or 10%; 50 West Coast execs axed later||Jan. 2001|
|CNN||400; considers 600 more cuts, for a total of 25%||Jan. 2001|
|Oxygen||65, after raising $100 million from Paul Allen||Dec. 2000|
|Clear Channel||2% at radio stations||Nov. 2000|
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