Declining Revenues Prompt Cuts Some Say Are Overdue
Life behind the scenes at E! Entertainment Networks is less light-hearted these days than what’s seen on the celebrity profiles, entertainment gossip and red-carpet award show specials for which it is known.
After years of rapid growth, an increasingly tough market has forced the L.A.-based parent of E! Entertainment Television, Style and the E! Online Web site to cut back and for the first time consider the use of outsourcing and co-productions for some of its content.
Faced with falling advertising revenues and little hope for a quick turnaround, E! Networks recently laid off 9 percent of its staff, or about 75 employees. The move was long overdue, according to people familiar with the network.
“It had become a little too full of itself,” said Larry Namer, who with Alan Mruvka founded Movietime Channel, which later became E! Entertainment. “When Alan and I designed it, there was a clear recognition of what it was and what it wasn’t…It just didn’t take itself very seriously and then it started to and it started to add lots of bodies.”
The across-the-board cuts announced on Nov. 8 left E! Networks with a workforce of 750 full-time employees. The laid off workers received severance pay based on their years with the company.
E! said in a statement that the cuts were motivated by the “current economic climate.” A company spokesman would not elaborate.
The company is 79-percent owned by Walt Disney Co. and Comcast Communications Corp. AT & T; Corp. holds 10.4 percent and Liberty Media Corp. another 10.4 percent.
“Any cuts you see like at E! Entertainment or any of their other channels I think is directly related to what is just an abysmal ad cycle,” said Jeff Wlodarczak, a cable and satellite analyst with CIBC World Markets. “Nine percent’s not bad.”
Mruvka, who left E! in the early 1990s before Style and E! Online were launched, said he and Namer launched the entertainment network with less than 30 employees. “We ran the company more entrepreneurially and now it’s run more corporate. That means more people,” he said.
Chief Operating Officer Ken Bettsteller claims that E! is run efficiently, but that the company, like other media firms, saw a “great reduction” in ad sales during this year’s upfront market and had to deal with current economic uncertainties.
Despite the staff reduction, E! Networks plans to increase production next year from the 900-plus hours of original programming it has produced annually. There are around 10 series in development for E! Entertainment and five new shows in the works for Style.
Asked if the 9-percent cut signaled E! Networks was overstaffed, Bettsteller answered: “That’s a tricky question and I would not in any way suggest this was a bloated company.
“Do we think that we can reprioritize…and focus (employees’) efforts on the kinds of objectives and projects that will return more revenues or ratings to us? Yes.”
With an ever-growing universe of channels to choose from on cable, television and satellite, entertainment providers have to work harder to get and keep viewers’ attention.
To that end, E! Networks recently created a new division dedicated to program development headed by former Fox programming executive Mark Sonnenberg, who joined E! in July. And with those changes, the network will consider working with others in its productions.
