More Cuts Likely, Media Firm Says
By Frank Ahrens
Washington Post Staff Writer
Tuesday, April 10, 2007
Discovery Communications of Silver Spring is laying off more than 3 percent of its workforce, with more cuts to come, as new chief executive David M. Zaslav reallocates resources to divisions most likely to position the media company for its digital future, the company said yesterday.
As part of an ongoing reorganization, Discovery is exploring whether it should get out of storefront retailing. The company, which has 100 Discovery stores around the country, pays high rent for premium mall space and is studying whether it could sell its branded products more efficiently with a combination of online sales and partnerships with established retailers, such as Wal-Mart and Target, executives said.
Most traditional media companies -- television, newspaper, radio, book publishing -- are adapting their products to an on-demand digital and wireless world. Discovery faces competition from sites such as YouTube and Yahoo, as well as from multimedia devices that include MP3 players and gaming systems. Broadcasters such as Discovery are reorganizing in a bid to expand their businesses and stay relevant.
Though the impact of the staff cuts is minimal company-wide, the departments hit by the cuts collectively would lose about 20 percent of their staff members. Another round of layoffs of similar severity in other Discovery departments is likely in coming months, the company said, as the cable television network seeks to trim underperforming divisions and bulk up those that bring in the most revenue.
The company told about 200 Discovery employees, most of whom work in the Washington area, that they were being let go.
Affected departments include the U.S. networks brand group; Discovery studios; the company's corporate affairs and communications departments; and Discovery education, which cut 84 jobs in December. Discovery, which has 6,000 employees worldwide, has 2,500 employees in the Washington area.
Discovery plans to hire in other departments, including its digital-media department, as the company works to make its television content available to high-speed Internet users. Laid-off employees would receive preference for vacant positions elsewhere in the company and the first chance to apply for newly created positions, according to an internal memo from Zaslav.
The number of potential new hires is not known, the company said.
"This is a tough day for Discovery," Zaslav said yesterday in an interview. "It's always difficult to restructure and reorganize, but we're really focused on trying to build the biggest and strongest and most-competitive non-fiction media company in the world."
Zaslav formerly headed the cable division of NBC Universal, owned by General Electric, and is a longtime friend of Discovery founder John S. Hendricks. Zaslav took over Discovery in January, a month after chief executive Judith A. McHale left the company.
Last year, Discovery has a positive ratings turnaround for some lagging shows and a uptick in revenue and profit. Discovery recently launched a documentary series called "Planet Earth" and a "green" channel of programming aimed at viewers who seek to be environmentally conscious.
Nevertheless, Zaslav almost immediately began to shake up Discovery after his arrival. His reorganization began at the top, as he let several executives go, including Billy Campbell, the U.S. networks president.
In late March, the company simplified its complex private-ownership structure by buying out investor Cox Communications Holdings, a deal seen by analysts as moving Discovery closer to becoming a publicly traded company. Today marks Zaslav's 100th day on the job at Discovery.
"The general perception was that the company had grown quite large and with new management and scrutiny on the business, this is one of the outcomes that could happen," said Bryan Goldberg, a Bear Stearns Securities media analyst. "Keep in mind he's coming from a unit of GE, a well-respected public company where -- I'm not saying it's better or worse -- the focus on financial discipline is different."
Under McHale, Goldberg said, "the visibility on Discovery was very low" on Wall Street.
"It's not so much an image problem as it [was] no one's telling their story to people like me," he said. "It has been quite a dramatic change since [Zaslav has] taken over."
View all comments that have been posted about this article.