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TelevisionWeek is teaming up with TV industry veteran Marianne Paskowski. The blog will give Marianne a forum to convey her deep knowledge of the industry and pass along some of the juicy morsels she's hearing on the grapevine. Marianne has covered the TV industry from the inside out and top to bottom, and TVWeek's readers are bound to benefit from her sharp eyes, ears and wit. TVWeek.com invites readers to jump online, chime in and pick Marianne's brain on the latest industry news.

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Marianne Paskowski



Viacom’s Cable Nets Aren’t Recession-Proof

December 4, 2008 10:35 AM

As the heads of the U.S.’ carmakers are begging again at the Fed window for a “bridge loan,” Scrooge arrived at Viacom, announcing that the company was laying off 7% of its workforce, eliminating 850 jobs.

Sumner Redstone

On top of that, Viacom, parent company of MTV Networks, is suspending senior-level managers’ raises for next year and is looking to write down certain programming assets that the company would not identify.

Although Viacom was the first cable programming company to announce large layoffs, it won’t be the last, said the president of an executive search firm. Layoffs are everywhere, she said, with “many under the radar.”

But Viacom has been hit particularly hard, falling behind its cable competitors in ad sales, which in part led to a huge drop in its stock price, a whopping 62% this year.

Maybe it’s time for Viacom chieftain Sumner Redstone to line up at the Fed discount window. After all, this is the second wave of widespread layoffs for the media titan in two years, and some industry observers say the company is still bloated.

And maybe it’s time for Redstone’s salary to be capped at $1 a year, like executives at ailing financial companies are doing during this prolonged depression.

Sound like a plan?


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Comments (32)

David Cohen:

Great ... more competition for those of us who were already laid off. Just the news I wanted to read. :(

Marianne Paskowski:

David,

And, alas, there's more: another 500 job cuts at NBC Universal.

Clearly this is not the usual recession, I think it's more like a depression and we need new yardsticks to measure the devastation to the U.S. economy that spread to the rest of the planet.

Tomorrow official jobs numbers, Dave, not looking good. I really think all of the overpaid execs in TV should take $1 a year as salary as not deepen the pain.

Good luck with your hunt....m

Arthur Greenwald:

I guess this amounts to yet another obituary for the late-90's trend towards media "synergy" -- that wonderful delusion that "if you merge them, they will come." AOL/Time Warner probably remains the most egregious example, but Viacom/CBS is surely a close second -- never having achieved much in the way of useful cross-promotion until AFTER they split the two entities into separate companies. Even then, the successes are small and few -- Katie Couric's popular post-election video blogs come to mind.

Only NBC Universal appears relatively healthy yet they too announced layoffs today. Ironically, beleaguered as it is, traditional TV continues to outperform new media revenues by a vast margin. One lesson to be learned I guess -- it's the customers not the executives who decide where the eyeballs will really go.

Marianne Paskowski:

Arthur,

Great point about the failures of synergy with the major media companies. Have the feeling a lot of these companies will decouple.

GE is the perfect example. What is that company today?
Beats me, used to think of refrigerators and stuff like that. Now it's lending arms, ouch, and media.
Odd bedfellows.

Thanks for your post, m

The question that always rises for me when any large conglomerate announces cutbacks in numbers nearing a thousand or more is: "How will the business continue to provide its services or products without these people, and IF it can, just what the Hell were they doing?"

I have started and run too many companies to know that it is on me to hire the right people doing the right work. No more, no less.

If numbers that large are to be cut from the ranks, then the cutting should start at the top, beginning with the idiot, or idiots who inflated the roster. Something smells that a problem went on and on until, "Aw fire a bunch of people, so the monthly costs go down".

As for Redstone, he's a game player with companies and the people who depend upon them for employment. His number was known when he owned Trans American Video in Hollywood in the 1970's. Dangerous then, much moreso now.

Retire Sumner, retire.
Peter Bright

Marianne Paskowski:

Hi Peter,
Nice to see you back. Well the idiot at the top is Redstone, and I, too, think he should retire. Clearly he paid no attention to the store, or we wouldn't be seeing such a large reduction in workforce.

But here's the other side of the coin. All of the media companies are doing it, a slow process, 50 here and there, under the radar.

Now I think we might see more staggering numbers as Q4 2008 comes to an end...........m

joe:

Yes, NBCU is also laying off a bunch of people. But as far as I know, it is not affecting their cable networks too much. So maybe the question is, why are NBCU's cable networks making money and why are Viacom's cable networks not making money?

Marianne Paskowski:

Hi Joe,

Good question. But the NBC layoffs look like they will go deep into cable, including CNBC.

The financial channel, no surprise, has never seen ratings like this in its existence is said to be laying off anywhere between 80 and 100 behind the scenes employees, not on air talent.

You know, I watch CNBC constantly, and I can see the economic crisis affecting its ad sales. The weirdest, cheapola ads for diabetic treatments, etc.

You're the guy who works for NBC (TV) in Chicago, right?

Thanks for posting, m

Jim Forkan:

Hi Marianne,
I'd agree with you that Redstone and a bunch of other top-tier execs should go the $1 a year salary route, at the very least.
A lot of media moguls have gone crazy with acquisitions in the name of the "s" word (synergy) but that doesn't seem to be working. They're like those other supposedly super-sharp execs at the Big 3 auto makers, on Wall Street and at various financial services companies who got the megabucks, and yet apparently didn't see any of this meltdown coming!
A couple of weeks ago, Citigroup went begging for a bailout and yet no one in the news media that I can recall even pointed out that not too long ago Citigroup wanted to buy Wachovia. Did all its cash evaporate in those few short weeks?
The big guys keep making the big mistakes, but the little people pay in layoffs (and the biggies continue to get those golden parachutes).
And David, I'm sorry to hear about your layoff. Another talented guy bites the dust -- but hopefully not for long.
All the Best,
Jim

joe:

Hi Marianne,
Yes, that's me. And I feel lucky to have survived through today and still being employed :). Part of the reason why CNBC is cutting back is because they didn't have to cut back awhile ago (when other NBCU properties were) because of the start of FOX Business Network. From what I've heard, it's not affecting Bravo, USA, Scifi as much. Sure, it is a little, but not as much as news and the stations divisions. I assume that is because our cable properties are making $ and the O&O's aren't.
joe

Marianne Paskowski:

Hi Jim,
So let's create our wall of shame here. Redstone is on the top of my list. Not too impressed with Murdoch of late, either,
Best, m

Marianne Paskowski:

Joe,
Glad to hear you're OK. Sometimes the stars in the portfolio, like NBCU's CNBC have to shore up the weaker sisters, like the O&O's...m

Jeff Mulligan:

Marianne,

Bloated companies having to contract during a downturn? What a surprise! Will Viacom find a place at the discount window, as essential as cable programs are, like GM or Citibank, to the entire economy? Hey, we all need fiction diversion and biased cable news these days.

Jeff

Cruiser:

Yo, Blondie --

One of the great benefits of the capitalist economic cycle is the way it periodically prunes the weak from the strong, just as the slowest and oldest sheep fail to outrun the fox. Too bad that lots of innocents get the shaft as the economy sends Redstone into the sunset. But that's the price paid by minions who've been riding along on the entrepreneur's risk taking. In a capitalist economy, we all face some degree of risk in the pursuit of growth. In a socialist economy, we all give up growth to avoid risk.

Cruisin not bruisin

Marianne Paskowski:

Hi Jeffster,

Nah, Redstone is still mopping up after his latest divorce, from yet another wife. He is the most self-centered ego-maniac media executive I know and needs a reality check.

Where is the board of directors here? Viacom has always been a mess. Axing Tom Freston didn't help things. At least he was in touch with his staff.

McGrath is a yes man, although she is a woman.

And why does Redstone get away with such corporate malfeance?

m

Marianne Paskowski:

Cruiser,
You make some sense, except Redstone isn't riding into the sunset. He'll die at his desk, wondering what the F happened.

But as to pruning the weak from the strong, Darwinism, Redstone is the weakest link in this hierarchy.

m

David Cohen:

I'll hopefully have better luck with my hunt than you will with the idea of these greedy SOBs taking salaries of $1 per year!

Marianne Paskowski:

David,
For your sake, I hope you're right, m

Tada!

At last.

We agree.

You write:

"...the idiot at the top is Redstone."

Yup.

We agree.

Redstone is an idiot.

Selling his $30.4 million stake in Midway Games for $100,000?

Idiocy.

Sheer idiocy.

Jason:

Hey M,
Six months ago I was going to graduate early a semester from undergrad college here in the midwest. Since then, I've seen the media company (relatively small overall but recognizable in the radio world) put out a hiring freeze and force the stations I work for to not rehire a fairly crucial position we used to have. Its putting a strain on all the others who I work with. The plan out of college was going to be transition into full time there. If I had to guess, that's not going to happen and instead I'll be looking to pump up the grades a bit and look into grad school.
Have a Merry Christmas,
J

Marianne Paskowski:

Hi Cory,
Yeah Redstone made a mess of that Midway stake. I also think he made a big mistake two years ago when he fired Tom Freston.

Thanks for bringing up the Midway mess...m

Marianne Paskowski:

Hi Jason,

Thanks for sharing your story and maybe things will turn around quicker than we all think. At least you have a gig, ask David who posts up here a lot and it's not pretty, and he's one hell of a talent.

Merry Christmas to you, too, m

Marianne,

I agree with you about Sumner Redstone.

If you're a shareholder you must have grown weary by now listening to his delusional bravado about living forever. While Redstone has obsessed over his immortality, the value of his stake in CBS and Viacom has tanked since he split the two apart.

You don't care too much for this man, Marianne, do you? You describe him as an "idiot" at the top of your "wall of shame." You characterize him as "the most self-centered ego-maniac media executive I know and needs a reality check."

You write, "But as to pruning the weak from the strong, Darwinism, Redstone is the weakest link in this hierarchy."

You ponder, "Where is the board of directors here? Viacom has always been a mess."

I couldn't agree with you more.

Viacom is a mess and Redstone is an idiot.

It's ironic, then, that this man you regard as an "idiot" at the top of the "wall of shame" should teach the tools of his trade to the woman you regard as a "great role model to younger women."

Geraldine Laybourne.

Love,
Cory

KM:

The gatekeeper lost the key.

For so long, big media conglomerates controlled the ability for people to see video in the living room. As digital cable expanded the dial, they used the weight of their programming and relationships to negotiate for more channels on the cable dial. Which needed more staff. It was new real estate on a system that was still closed and they quickly took it.

They acquired and merged to increase production to fill the larger pipeline. They were still the only game in town and times were good. And when they are good, maybe you don't hire the smartest person you met for a job but get someone who you can control, someone who doesn't threaten you. Multiply that over and over and that's what's happened. It is what sustained success often brings. Lethargy.

The internet has obviously changed the game. Distribution is not in the hands of a precious few anymore. Media company's real estate on the cable dial doesn't make the same impact or same amount of money it used to. Now they are undergoing layoffs and are shifting from bloated to being spread very thin at a time when it takes more concentrated marketing to make (and monetize) a hit. Not a good combination.

I expect to see a ton of "uncoupling" in the months and years to come. Bigger just is not better in a long tail world. There is no going back.

Marianne Paskowski:

Cory,
I often wondered how hands on Redston actually is, somehow I doubt that he is. He seems to like to pit senior executives against one another rather than promoting a team approach.

m

Marianne Paskowski:

KM,
Couldn't agree more with you. The mega media companies are having a hard time knocking out the silo mentality that still largely exists.

I'm surprised how little cross promotion there is at companies like NBCU. Few of the company's networks use their airwaves to promote other brands in the family stable, let alone online offerings.

Maybe synergy is just an unrealistic pipe dream, m

This week I received an e-mail from Dr. Susan Linn, director of the Campaign for a Commercial-Free Childhood, bringing to my attention Nickelodeon's (a Sumner Redstone company) airing of The Bratz Movie. I didn't know anything about the Bratz dolls, on which the movie is based, until last year when one of my students created a blog called, "Bratty Hookers: Bratz, Bitches, and Your Six Year Old Daughter." Apparently these dolls, made up like little prostitutes, are known by their critics...and there are many...as the "Slutz Dolls."

Just guessing here, but maybe Redstone's dire financial woes are his karmic payback for providing hookerz to little kids.

Are we witnessing justice in action?

Marianne Paskowski:

Cory,

There's no justice whatsoever at Viacom for staffers whose jobs are on the line.

While Nero fiddled, here Redstone, Rome, Viacom was/is afire.

Did you know the head of Ford makes $1 a year, doesn't take health care or bonuses? He's trying to change that company around because he sees the successes of his competitors, namely Toyota and Honda, that are hurting now, too.

Do you really think Redstone would even consider such options?

I don't, m

Dear Marianne,

I love it when we agree.

There is more harmony in my universe when we do.

Redstone doesn't give a $%#@ about anything other than the two things always on his mind:

1.) Making money.

2.) Getting laid.

He's single.

He's powerful.

He's rich.

He's God of MTV the God of Youth.

He thinks he will live forever.

He is dangerous.

What poetic justice it is to see him twitch and squirm one day at a time as his empire slowly implodes.

It must be torture for him.

When he's thinking about it.

Marianne Paskowski:

Cory,

The problem here is I don't think he's twitching and squirming at all, m

Let's review:

Six weeks ago in an act of desperation to meet his loan covenants he was forced to sell $233 million worth of shares in CBS and his beloved Viacom at low, low, low bargain basement prices while the market took one of its worst dives ever.

Last week he dumped $30.5 million worth of shares and his ownership take in Midway Games for $100,000...less than 1% of their value.

This week he laid off 7% of his Viacom work force...850 jobs.

In 12 days he owes his debtors $800 million cash money.

Revenue streams from local car dealers, retalers, and other venerable advertisers have all but dried up at his cable channels and his O&O's and there is no relief in sight: only predictions of more doom ahead.

His business practices are being assailed from the right and from the left, from the FCC to the Campaign for a Commercial-Free Childhood to right here in the blogosphere.

Sumner Redstone, yes he's a twitching.
Sumner Redstone, oh he's a squirming.
His Viacom woes, they're quite bewitching
His Viacom empire...Oh Look! It's burning!

Sumner Redstone desperate old soul
His own son sues while he battles for control
With his daughter Shari. Shari. Shari.
To his kin he's the contrary,

Obstinate, greedy, near-death fool.
Grasping to what? His money. his tool.
Sumner Redstone, yes he's a twitching.
Sumner Redstone, oh he's a squirming.

His beloved Viacom is hereby buring.

It's a one-man show over there at Viacom. As you point out, Marianne, Sumner Redstone is not only an "idiot" residing atop the "Wall of Shame," but "the most self-centered ego-maniac media executive I know and needs a reality check."

He's getting his reality check right now, and if he's not twitching and squirming he's in denial. If he's in denial then he's delusional. If he's delusional doesn't the Viacom Board of Directors have a fiduciary responsibility to their shareholders to remove him?

Marianne Paskowski:

Cory,
Obviously the man is delusional. m

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