Jobs to go at Nine as Seven axes shows
A NEW wave of cost-cutting has hit the media sector. Nine Entertainment announced job cuts due to the advertising downturn, while rival Seven axed its game show The Price Is Right and may also get rid of current affairs show Today Tonight.
Nine's chief executive, David Gyngell, announced to staff on Wednesday that "we have to toughen up and find ways to save costs and operate more efficiently".
No numbers were given on how many staff will be let go, but sources said it would be less than a hundred. Nine is expected to announce voluntary redundancies within weeks. It employs 2000 people across the Nine Network, Ticketek and Allphones Arena.
The Ten Network conducted a highly public round of job cuts last year, which it blamed on difficult trading conditions, the one-off impact of the Olympics and its weak ratings performance, which lead to a $13 million loss for the year.
About 100 employees were let go, including many prominent personalities from its news operations, which were cut extensively.
Due to the different operating environment's of Nine's various businesses, Mr Gyngell said he had asked Nine Network chief Jeffrey Browne and Nine Events chief Geoff Jones to communicate to their staff the "specifics of the cost-cutting plans for their respective businesses". He said the media sector continued to go through unprecedented change while facing financial challenges caused by the advertising downturn.
This came despite the Prime Minister, Julia Gillard, on Wednesday announcing a date for the federal election. The election was seen by some as a potential pickup for the advertising market.
Nine announced the cost-cutting ahead of the the company being handed over to its lenders next week in return for them cancelling $3.4 billion of debt. The scheme of arrangement governing the restructure was approved by the courts this week. A new board will be installed following the restructure, including the former treasurer Peter Costello.
Nine's financial accounts last year indicated just how badly the company has suffered under its immense debt load, as well as the media downturn. It made a $972 million loss for the financial year ending June 30, taking its total accumulated losses to more than $2.5 billion.
This included a $783 million write-down on the value of its media assets. Most of the write-down related to the falling value of the network's broadcast licence.
The company was not generating enough cash to pay its way, with operating cash flows negative to the tune of more than $17 million last year.
This is despite it paying only $267.7 million of an interest bill that totalled $372.7 million last year.
Debt was not the only issue. Nine Network was forced to record provisions of close to $60 million over the past two years, which relate to the difference between what it must pay for some of its programming and what it will receive in revenue against the programs.