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MTVi cuts 105 jobs
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September 27, 2000: 8:01 p.m. ET
Viacom-owned network of music sites slashes jobs, delays IPO
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NEW YORK (CNNfn) - MTVi, the leading network of music entertainment sites, on Wednesday became the latest in a string of consumer-oriented Web companies to announce substantial job cuts.
The New-York based company, which is majority owned by Viacom (VIA.B: Research, Estimates), said that it is laying off 105 workers, equal to about 25 percent of its staff. The cuts will be made in the company's editorial, marketing, and technology areas said Judy McGrath, president of MTV Group. MTVi grew up around four main Web sites - VH1.com, MTV.com, Sonicnet.com, and Country.com.
"There is a way to operate this company if we combine forces in some places," McGrath told CNNfn.com. "Rather than having four editorial departments, we will have one. There also will be some shared technology practices."
According to several published reports, the money-losing MTVi will delay or cancel its plans to become a separate publicly traded company. The company had filed last February to do an initial public offering through underwriters Morgan Stanley Dean Witter and Credit Suisse First Boston.
The delay comes as many consumer-oriented dot.com stocks are trading more than 80 percent below their 52-week highs and capital for new Web companies has dried up.
 MTVi is the latest victim in a long string of dot.com shakeouts. Earlier this month, Pseudo Programs, which provides interactive video programming over the Internet, said that it dismissed its entire remaining staff of 175 employees because it ran out of cash to continue operating.
Along the same line, online marketing firm Engage Inc. (ENGA: Research, Estimates) said earlier this month that it is cutting 175 jobs to sharpen its focus on providing interactive marketing services. Internet search service AltaVista Co., which is owned by CMGI (CMGI: Research, Estimates), said it would cut 25 percent of its staff and phase out of the portal business to refocus on its search business.
Media conglomerates have also struggled with the challenge of making money from their Web properties. NBC's Internet wing, NBCi, in early August said it would cut 170 jobs, or about 20 percent of its work force, as part of a reorganization of the struggling division. NBC is a subsidiary of General Electric Co. (GE: Research, Estimates).
Further, Disney Corp's Web operation Go.com, which has struggled to meet the content integration goals of its massive parent, was recently relaunched.
MTVi is a network of 22 music Web site destinations formed in July 1999 to deliver music and music-related information. According to the Web audience measurement firm Media Metrix, 4.9 million different people visited an MTVi site in August 2000, growing from 3.1 million unique visitors in August 1999, when the consolidation was named the MTV Networks Music Sites.
MTV.com ranked fourth in Media Metrix's August ranking of music-related Web sites, with about 3 million unique visitors. Sonicnet.com ranked eighth, with 1.6 million visitors, and VH1.com came in 11th, with about 1 million visitors.
However, the growth in MTVi's audience was not enough to generate a profit for the company. In a filing with the Securities and Exchange Commission, it reported revenue of $18.2 million and a net loss of $46.4 million for the year ended December 31, 1999, the latest period for which financial information is available. Mark Pasetsky, a spokesman for MTVi, said that the company's revenue is projected to double this year.
Such steady fiscal bleeding has forced Web content companies to rethink their strategy for making money and wooing visitors, Stacey Herron, an online content analyst for Jupiter Communications, told CNNfn.com.
"When you see an entertainment giant such as MTV making cutbacks in their online space, it sends a message through the whole industry that it is time to re-evaluate exactly how they run their online business and how they structure their organization," she said.
She noted that the MTVi cuts, particularly in its editorial departments, likely reflect the company's belief users are not reacting passionately to the written content on the site. Therefore the company may choose to beef up other content areas, such as online music and videos.
Rob Lancaster, Internet analyst at the Yankee Group, also notes that the struggles of the major media companies are generally borne of poor execution.
"They do have a massive amount of resources that they can put on the Web (but) it's just not making sense," he said.
"Content on the Web is always going to have a place," he added. "Still, you can't carpet bomb users with content. You have to understand the online consumer and what specifically they are looking for. Don't just throw songs and random streaming video clips at them."
"It's like having a department store, and not having individual departments and expecting (consumers) to find what they are looking for," Lancaster said. 
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