MTV to cut 250 jobs, shift focus to digital media

By Alana Semuels
Times Staff Writer

6:06 PM PST, February 12, 2007

Viacom Inc.'s MTV Networks will cut 250 jobs nationwide to focus on growing digital entertainment, according to an internal memo circulated Monday.

The layoffs represent about 6 percent of the company's 4,500 worldwide work force, and are expected to cut across the company's operations. MTV Networks operates well-known television channels such as Comedy Central, Nickelodeon, MTV and Spike.

"These moves are necessary to best align us for the future," MTV Networks Chief Executive Judy McGrath said in a memo.

McGrath said department heads would meet with affected employees, adding that most cuts would be finished by the end of the week.

"The close-knit culture we have at MTV Networks makes this especially tough," McGrath said.

MTV Networks is the latest in a line of big media groups slashing jobs to keep costs down. NBC Universal announced in October that it was cutting 700 jobs, Time Warner Inc. eliminated 6,000 positions over a year, and Walt Disney Co. said in July that it was cutting 650.

Viacom has had a turbulent year. Chairman Sumner Redstone, frustrated with the company's lagging stock price, ousted Chief Executive Tom Freston. Two senior MTV Network officials stepped down in January.

After Viacom split from CBS Corp. at the beginning of 2006, shares fell 16 percent before rebounding in September after the management shake-up. Viacom stock was down 2 percent to $39.56 Monday.

"Viacom's new management team is very focused on driving earnings growth," said Laura Martin, senior media analyst with Soleil Securities Inc. "Cost cutting is necessary to accomplish that."

Although analysts were pleased that Viacom was taking steps to focus more on digital, they consider the company a laggard. Other media giants such as Walt Disney Corp. and Rupert Murdoch's News Corp. were quicker to move on this front than Viacom.

"They did seem to drop the ball," said David Joyce, analyst with Miller Tabak & Co. "They've been behind the rest of the media conglomerates in their strategy."

Viacom executives need to prove themselves by making changes in the way the company is structured, Joyce said. They seem to be bringing the company up to speed, he said, driving users to the MTV Networks Web site.

Earlier this month, Viacom demanded that YouTube take down 100,000 clips, including segments from "The Daily Show with Jon Stewart" and "The Colbert Report." Many of the clips are available on Web sites controlled by Viacom.

MTV used to have the luxury of being the brand that represented youth culture, said James McQuivey, media analyst with Forrester Research. Now it has to compete more aggressively to stay on top.

"Major sites like YouTube are to this generation what MTV was to the generation of the 1980s," he said. "That has to be a threat."