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MTV Networks to cut 250 positions

February 13, 2007|Alana Semuels | Times Staff Writer

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

The layoffs represent about 6% of the company's 4,500 worldwide workforce, 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 TV.

"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. It is unclear how many employees will be affected in Southern California, where the company has a major presence in Santa Monica.

"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 Inc. 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 as Chairman Sumner Redstone, frustrated with the company's lagging stock price, ousted CEO Tom Freston. Two senior MTV Networks officials also stepped down in January.

After Viacom split from CBS Corp. at the beginning of 2006, shares fell 16% before rebounding in September after the management shake-up. Viacom stock was down 82 cents to $39.56 on Monday.

"Viacom's new management team is very focused on driving earnings growth," said Laura Martin, senior media analyst with Soleil Securities Group 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 Disney and Rupert Murdoch's News Corp. have been more proactive 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 changing 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 website.

This month, Viacom demanded that YouTube Inc. take down 100,000 clips, including segments from "The Daily Show with Jon Stewart" and "The Colbert Report." Many of these clips are available on websites controlled by Viacom.

MTV Networks executives hope to make content more accessible, such as allowing Web users to grab videos and post them on their websites.

But the many companies already established online could provide heady competition. MTV used to have the luxury of being the brand that represented youth culture, said James McQuivey, media analyst with Forrester Research Inc. 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."

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