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CBS Begins Firing Up to 300 to Cut Costs

Television: Layoffs are a result of falling network viewership and rising expense of programming.

October 06, 1998|MARLA MATZER | SPECIAL TO THE TIMES

CBS Corp. acknowledged Monday that it had begun a round of expected layoffs as part of an industrywide belt-tightening by the ailing network TV business.

The number of employees to leave could end up totaling 300, according to a CBS source.

CBS President Mel Karmazin had told analysts recently that $70 million was being set aside to cover severance packages. The move puts CBS in line with the other two major networks, which also are slashing costs.

Top-ranked NBC, owned by General Electric Co., began layoffs expected to total about 300 last month. Walt Disney Co.-owned ABC, the No. 3-ranked network, confirmed Monday that it had instituted a temporary freeze on salary increases and promotions. ABC also has a freeze on replacing workers who leave, a company spokeswoman said. A spokesman of Fox, a division of News Corp., said the network hasn't had staff cuts because it is significantly smaller than the other three networks and made some cost cuts two years ago.

CBS, which has a lucrative radio group, is looking to boost profitability and bolster its stock price. It expects to lose $100 million on its network unit for 1998 even though the network began the current season on a strong note.

CBS' stock went up after Karmazin recently told analysts about the impending layoffs. On Wall Street, CBS has long been rumored to be a potential acquisition target.

The networks have been struggling with flat ad rates and the attrition of viewers to cable TV outlets.

Top programming has also become extremely expensive: CBS made a $4-billion deal beginning this year to air Sunday National Football League games, and NBC reportedly paid $850 million to keep its top-rated drama "ER" for three more seasons. ABC and sister company ESPN paid $9.2 billion for football rights over eight years.

Alan Kassan, an analyst with Deutsche Bank, said the networks are simply reacting to economic conditions. "If there is an uncertain outlook for the economy, the networks won't be immune," Kassan said. "Plus, the cost increases for programming mandate that [the networks] hold their costs down."

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