Recent grads told to go digital
Many a recession has been followed by a jobless recovery, but those words have particular resonance in the media biz, where the loss of jobs continues to linger even as the economy starts to rebound.
The problem isn’t a shortage of money. Big media companies ended 2010 with a record $23 billion in cash on their books. Rather, it’s how that coin will be allocated, and at this stage it’s not clear how much of it will go toward new hires vs. stock buybacks and boosting stock dividends
And if recent headline-making layoffs at MySpace, Disney’s gaming studio and Universal Music are any indication, jobs aren’t necessarily a priority.
But the media jobs picture varies by sector, and in some areas it may not be as bleak as it seems. A close look at the big picture since the economy began its downward spiral in 2008 reveals that the film and TV sectors have fared better than other parts of media, according to state labor data from California and New York, the main industry hubs.
Overall the media biz lost on average about 5% of its workforce since 2008, with publishing and Madison Avenue having been hit the hardest. The movie business actually added nearly 20,000 jobs in that period, according to the state figures.
Federal labor data for 2010 released in January confirms the trend, showing movie production jobs were up 4% last year, one of largest gains among employment sectors.
“We have hot spots and, as we all know, content is still king,” says Paul Richardson, senior veep of human resources at ESPN, which has seen some slowdown in hiring for its global workforce of 6,500 in the past two years. But Richardson says areas like its Latino channels and digital media continue to staff up.
Many believe the evolution of digital business models will play a major role in the future of job creation — or destruction.
“Because the media business is in the midst of tectonic upheaval and dislocation the likes of which no one has seen before, there is no way to predict the longer-term repercussions of that when it comes to headcount and organizational structures,” says Will Schutte, a leader of the global media practice for executive recruiters Spencer Stuart.
Technical curve balls also have an impact. Gigi Johnson, a lecturer in entertainment strategy at UCLA’s Anderson School of Management, notes that the growth in film jobs since 2008 coincides with the the surge in 3D. “Everybody is thinking in terms of 3D now and that is where the jobs are being created,” she says.
Johnson adds that she also sees employment growth associated with strategic planning and information management — areas where most of her MBA students seem to be getting work these days.
To the extent that there’s an economic rebound, nobody is embracing it more enthusiastically than the executives at the Weinstein Co. Of course, nobody saw the nadir of the recession with as much clarity either.
Teetering on the brink of bankruptcy with more than $450 million in debt, the indie film company founded by Harvey and Bob Weinstein was able to wipe the slate clean last summer after a restructuring of the debt by Goldman Sachs and Assured Guaranty. TWC fell from a peak of 200-plus workers to 106 as it faced its financial crisis, says COO David Glasser. “We were a poster child of what happened” in the business, he adds.
Today, the company is back up to about 125 employees, with plans to fill several senior positions, says Glasser. His theory on why the film sector has done better than others through the downturn: “People needed escapism. As the price of bigscreen TVs came down at the local Costco, people turned to movies to forget about their troubles.”
Just the same, executives remain cautious. “Today, we’re not in a downsizing mode nor do we have any sort of hiring freeze in place,” says a spokeswoman for Viacom CEO Philippe Dauman. “That said, we continue to be judicious both in new hires and in replacing individuals who leave. The areas in which we continue to hire are creative and programming. With more and more demand for our content across multiple platforms, this an area that will continue to grow.”
One reason why Hollywood has proved more resilient than other sectors of media may be that while the number of jobs is up, salaries are not, and it’s easier to keep people working if they’re earning less.
An indicator of the drop in wages: The Screen Actors Guild’s TV earnings slid by some $175 million through October, or 20%, from 2007 levels. Even the SAG health plan took a hit, as eligibility levels for members for 2011 shrank by 3%. (Of course, some of this decline can be attributed to the fact that AFTRA has taken on nearly all of the new shows.)
Another indicator is that studios have been reducing the number of production days on certain projects over the past decade to pare costs, which lowers earnings for workers on movie and TV sets.
Variety reported in September that the number of term deals at the major studios had actually edged up 5%, from 135 to 142. But paydays are smaller and the pacts come with tighter restrictions, including the issue of shooting days, particularly for non-tentpole films.
But while Hollywood has taken a hit, the publishing biz has taken a wallop. According to state data, there are nearly 14,500 fewer publishing jobs in California now than in 2008 and 8,400 fewer in New York City. Madison Avenue hasn’t had it much easier, losing 6,800 jobs in New York since 2008. And while the ad revenue recovery has been in full swing for a least three quarters, with some media outfits consistently reporting double-digit gains, ad jobs continue to bleed. Madison Avenue jobs were down by another 3,500 in 2010.
Ad forecasts continue to be rosy. ZenithOptimedia
upped its projections for 2011 in early December to a global growth rate of 4.6% . That bullish outlook even has some companies from the hard-hit publishing world filling jobs. Hearst Magazines, home to such titles as Esquire, Cosmopolitan and Good Housekeeping, has filled 30 jobs over the past few weeks and is recruiting for 60 more, says a company spokesman.
Where companies do plan to hire, executives say privately, is for efforts related to digital strategies. Look no further than cable giant Comcast, which created Comcast Interactive Media (CIM) in 2005. It now employs more than 800, up from just a handful at its launch. (Overall, Comcast says it has been adding about 2,000 jobs a year, even through the recession.)
Of course, there is an irony to hiring for digital business models. “The reality is that the new digital ecosystem is having the effect of thinning margins and some companies just won’t be able to afford the same headcount as before,” says Spencer Stuart’s Schutte. “As a result, some traditional hierarchies will get flattened out.”
Particularly as studios become less top heavy with fancy-titled executives, more investment will be made in new digital products. A perusal of the job boards at the major studios’ websites shows plenty of offerings like Web developer, senior software engineer, Web analytics coordinator, analyst of metadata, director of interactive marketing, and a slew of auditor and financial analyst openings.
But those categories could change overnight. In the old days, media execs could look out three years and generally forecast their hiring needs. That’s no longer the case, as the recession has rewritten old principles.
“The truth in the media business today is that it is very hard to have visiblity 12 months out, let alone 36 months going forward,” says Schutte. “That said, digital is the media business now, unlike a decade ago when somone would say, ‘We ought to take a look at digital,’ or five years ago when companies first began to explore ways to monetize the Internet in earnest.”
One bright spot came from the CEO association Business Roundtable. Its latest survey of the C suite released in December showed that of those toppers polled, 45% said they expected to hire more workers in the next six months. That compares with the 19% from the fourth quarter of last year.
The big question is whether the media moguls share that optimism.