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MAVIS SCANLON
Cable is often called a recession-proof industry. Will it be for the people who work at MSOs?
In recent weeks, several cable and broadcast networks and numerous equipment suppliers have incurred rounds of layoffs.
Just last week, CNN said 400 people, or about 10% of its staff, would lose their jobs. Before that, NBC said it would lay off between 280 and 560 television staffers, or between 5% and 10% of its work force. Both News Corp. and NBC have taken the ax to their Internet divisions.
On the operator side, there hasn't been that much bloodletting.
So far, the damage has been limited to Adelphia Communication's business services unit, which laid off 8% of its work force of 2,400 as it pares its expansion plans, and to AT&T Broadband, which let go more than 300 workers in a restructuring of its Atlanta operations.
It's less clear whether other MSOs are looking for places to reduce head count.
For now, the feeling among MSOs is that well-trained people are still hard to come by, and their businesses are strong enough - especially with the demand for new services - to withstand an economic downturn.
Several operators, including Time Warner Cable, Insight Communications, Cox Communications and Charter Communications, say they expect no layoffs.
At Insight, which has a no-layoff policy, the biggest issue "is finding qualified people," says Kim Kelly, EVP/CFO/COO. "I couldn't imagine that [any MSO] would be shrinking."
Industry analysts say that while they do not expect widespread restructuring of operators' work forces, the possibility of a recession may force MSOs to make some difficult staffing decisions.
"It's hard to come to the conclusion that the rest of the world is dodging bullets and the large MSOs will go unscathed," says David Smith, an analyst at Dain Rauscher Wessels.
Most operators might not have to act drastically because they never scaled up their staffs dramatically, he adds.
Of all the operators, AT&T, with its poorly performing long-distance unit, is particularly vulnerable. With the expected break-up of the company, AT&T will seek financing in coming months and needs to demonstrate to investors it is serious about controlling costs.
There will be "more pressure on AT&T to keep its earnings up" as it heads into the capital markets, says Gary Jacobi, an analyst following the telecom and cable giant at Deutsche Banc Alex. Brown.
He thinks "some cutbacks or reassignments" will take place.
Instead of massive layoffs, he sees AT&T moving people between divisions.
An AT&T spokesman confirms that strategy.
"In the days ahead, I would anticipate there will decreases in jobs aligned with voice-based technologies and continued increases in assignments to wireless and broadband communications," says Burke Stinson, an AT&T spokesman. AT&T Broadband, with about 55,000 employees, accounts for about one third of AT&T's total work force of 165,500.
CNN's layoffs were expected, but now its newly merged parent, AOL Time Warner, has become the subject of rumors it is looking for personnel cuts across all divisions.
At CNN, the final figure of 400 layoffs was lower than some published estimates. CNN is closing its interactive division, accounting for about one third of the layoffs.
Its Web site operations will now fall under the auspices of the TV division. Another third of the layoffs will come from programming and one third in other areas.
USA Network, looking to revamp its original series roster, is filling up its development pipeline.
EVP/GM Rob Sorcher says there are more than 40 projects in development, some of which could surface this summer.
The network has been seeking a new program identity since losing WWF wrestling to TNN last year.
Speaking at the TCA Tour in Pasadena, Calif., Jim Miller, EVP-original programming, announced an agreement with director Brett Ratner (Rush Hour) to executive produce Kung Pow, a one-hour action series about a man who inherits the wisdom of a mystical martial arts warrior.
Other series in development include Throughtcrimes, a one-hour mystery centering
on a telepath whose visions drive her to the brink of insanity; Mob Wives, a one-hour drama from Nick Pilegi (Casino, Goodfellas) following the lives of the women behind the gangsters; Ms. Tree, a one-hour mystery based on the comic book of the same name featuring a sensual, intelligent female sleuth; Daylight Robbery, a limited one-hour drama about housewives who commit crimes on the side.
Miller also discussed a "USA Mystery Wheel," featuring movie projects from mystery/suspense writers Ken Follet, David Baldacci and Robert Parker.
"This was the first thing I came up with when I joined USA in October," he recalls. "We're looking to get three or four two-hour movies from a few break-out characters. I loved Columbo and MacMillan and Wife. Since you're producing fewer episodes than with series, you can make them more distinctive, make them events on the schedule."
Sorcher says "USA Mystery Wheel" wouldn't begin spinning until 2002, when "we get enough product."
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