As a target of their hype and sensationalism, I will be more than pleased to see their station and certain "crack" reporters on this list
Friday January 12, 5:21 pm Eastern Time
Ad Slowdown Spells Pink Slips in TV
By Jennifer Laidlaw
NEW YORK (Reuters) - The softer advertising environment is taking its toll on some of America's major television networks, with layoffs and hiring freezes at some top TV companies growing.
U.S. television network NBC, home of top-ranked TV shows like ``Friends'' and ``Frasier'' said on Friday it will lay off between 280 and 560 people, or between 5 and 10 percent of its 5,600 workforce in the quarter as it seeks to cut costs in the wake of a slowing economy, which has hurt advertising demand.
CNN News Group, a unit of the world's largest media company -- newly-merged AOL Time Warner (NYSE:AOL - news) -- is also expected to announce a large number of layoffs, the Wall Street Journal reported this week. CNN declined comment.
In December, Rupert Murdoch's News Corp. (Australia:NCP.AX - news) said it had started a hiring freeze due to a weak advertising market.
``Media companies exposed to the softer advertising market are trying to exact as many cost savings as they can,'' said Vinton Vickers, an analyst at J.P. Morgan Chase. ``It's a natural thing.''
Dot-com start-ups had been spending huge amounts of their budgets on advertising as they tried to raise their profiles, but as they have fallen on hard times, so have their ad dollars. And concerns about economic growth have led companies to be more picky about their advertising spending.
``It is no secret that the current economic climate is affecting our business,'' NBC Chief Executive Bob Wright said in an internal memo to staff obtained by Reuters.
``It is now clear that we must go beyond belt-tightening and take the additional step of reducing the size of our workforce,'' he wrote to employees.
Analysts said the dot-com bust and the slower economy are both combining to create a softer ad environment, leading to lay-offs in companies dependent on advertising, such as television, experts say.
``It's possible that, if such layoffs are taking place, that might be the cause `` said Rich Hamilton, chief executive of media buyer Zenith Media.
He said after two to three years of strong advertising growth, there is now clearly a slowdown.
J.P.Morgan Chase's Vickers was expecting flat growth in the first quarter of this year, compared with between 2 and 5 percent in the last quarter of 2000. And that compares with growth of low- to mid-teens in the last quarter of 1999, he said.
There could be further layoffs in the sector, experts say, depending on what the economy does.
``It's hard to say,'' Vickers said. ``It's probably not out of the question that companies will utilize these tough times to reassess their organization.''
Dana McClintock, spokesman at Viacom Inc. (NYSE:VIA - news)-owned CBS said he was unaware of any layoff plans at his network.
He forecast a good year for the network. It will air this year's Super Bowl, one of the year's top advertising events, and a second series of the popular reality TV show ``Survivor.''
Officials at Fox, a unit of News Corp., could not be reached for comment.
But other industry watchers said the layoffs are just another indication the advertising market is returning to more normal growth rates.
``It's more a reflection about how these companies got caught up in the irrational exuberance with advertising rates growth at 8 to 9 percent,'' said Jim Nail, analyst at Forrester Research.
There will be some moderate cuts in head counts, but it is more a case of the job market returning to normal. The ad market traditionally grows by about 5 percent a year, he said.
As the economy roared ahead, media companies hired more people to sell ads and now that things have slowed, hiring levels are going back to more normal levels, he said.
While many forecast a tough year ahead for ad sales, others are predicting the picture may be getting brighter.
In Pasadena, Calif., at the winter Television Critics Association meetings, the co-chairman of ABC Entertainment Television Group, Lloyd Braun, said his network is beginning to see some signs advertisers are beginning to re-emerge in the marketplace with money to spend.
``We are starting to see signs of improvement, but it has been tough, I think, on everybody,'' said Braun. ``But we are looking forward to improving in the months ahead.''
Braun is one of the top executives developing new shows at ABC and is not directly responsible for ad sales.
Industry sources said that, after the end of the recent actors strike against the commercial industry, advertisers have been producing new ads and they want those ads on the air. Still others said they had heard rumblings of several large, multimillion-dollar campaigns in the works.
biz.yahoo.com |
