Cuts likely to hit VPs, sr. VPs
Viacom is undertaking a major retrenchment at its cable nets, eliminating about 250 staff positions across MTV Networks.
Cuts will rep about 6% of MTVN’s workforce, though numbers actually come in lower than some whispers had put them last week.
MTVN topper Judy McGrath announced the cuts in a memo Monday morning.
“To keep winning in this revolutionary environment, we have to refine our business and organizational model,” she wrote. “We’ve carefully reviewed all aspects of our business, and these moves are necessary to best align us for the future.”
Specifics are expected today regarding which staffers would be let go; execs at the veep and senior veep levels were likely to be among those leaving.
Further news of the cuts could continue to trickle out later in the week.
McGrath acknowledged that the music group, the kids and family group and the entertainment group would all be hit by the cuts. That essentially encompasses all Viacom cable nets, including the biggies: MTV, VH1, Nickelodeon, Spike and Comedy Central.
While it’s not yet clear which departments would affected, insiders said the net effect would likely be to bring together at least some functions that the company has traditionally kept separate under its various cable brands.
In addition, cuts could take place in international and sales divisions, McGrath said.
Insiders said news is not directly related to the ouster of Viacom CEO Tom Freston last summer. Exit of the former CEO — and entry of Sumner Redstone’s handpicked replacement Philippe Dauman — had prompted rumors of a shakeup that never materialized.
But MTVN has been under the gun of late as Viacom chair Redstone has emphasized digital strategy.
After a slow start, Viacom has been more aggressive on the digital front, acquiring Atom Entertainment last summer and subsequently installing company’s Mika Salmi as prexy of global digital media for all of MTVN.
In her memo, McGrath emphasized digital growth. “Over the last few years, we’ve changed the way we operate to become a truly multiplatform content company.”
She also hinted at new models, which observers said could include innovative ways of selling content and ad time. International growth is expected to be a priority, especially for MTV, as net continues to export brand globally.
But sources said cuts could come in digital areas as well and that new investment in digital areas isn’t a given.
Cutbacks at MTVN also highlight the problems of linear cable nets as advertising begins to slow down and Wall Street takes a cautious attitude toward old-line media biz.
Cash flow at the major nets, including Viacom’s, has begun to slow down over the past several years. At Nickelodeon, the country’s largest cable operator by profits, cash flow grew only by about 7% in 2006 after spiking 10% in 2005, according to estimates from Kagan Research.
Former consultant Michael Wolf, who had been brought on as prexy-chief operating officer for MTVN in 2005, and affiliate sales prexy Nicole Browning have both recently ankled the conglom.
News also follows announcement of departures at an MTVN rival, NBC U, where cable distribution chief David Zaslav recently ankled the firm, landing at Discovery, and last week initiated a major reshuffle there.
Despite Wall Street’s generally high regard for cost-cutting measures, investors were mixed on the MTVN news, sending Viacom stock down 2% in Monday trading.