WASHINGTON/NEW YORK (Reuters) - The number of planned job cuts in the U.S. media sector surged 88 percent last year and that trend will likely continue as readers shift from print to online services, a study on Thursday showed.
For all of last year, the media industry announced 17,809 job cuts, up sizably from the 9,453 cuts announced the prior year, according to the job outplacement tracking firm Challenger, Gray & Christmas.
That was the biggest tally of announced layoffs for the industry since 2001, when the dot.com collapse was under way.
The trend is expected to continue this year, according to John Challenger, chief executive officer at the Chicago-based firm, which tracks planned layoffs, not actual layoffs.
"Already this year we have seen job cuts announced by Time Inc and the New York Times Company," Challenger said. "These organizations will continue to make adjustments as their focus shifts from print to electronic."
For the first half of this month, there have been more than 2,000 planned job cuts announced. However, in terms of total job cuts, the downsizing in the media sector pales in comparison to the auto industry, which saw 158,766 job cuts in 2006.
Still, newspaper publishers, broadcasters and other media companies have been cutting jobs and reevaluating their business models as a growing number of Americans turn to the Internet for news and entertainment.
Since the beginning of 2007, top U.S. magazine publisher Time Inc. said it would cut 289 jobs, the New York Times Co (NYT.N: Quote, Profile , Research) announced plans to shed 125 jobs and close foreign bureaus for its Boston Globe newspaper.
But print media is not alone in the changes. NBC Universal, home to the NBC television network and Universal Studios film unit, announced late last year a $750 million overhaul that includes cutting nearly 700 jobs to invest in its faster growing digital operations. NBC is controlled by General Electric Co. (GE.N: Quote, Profile , Research)
"Until they can figure out a way to make as much money from their online services as they are losing from the print side, it is going to be an uphill battle," said Challenger of planned cuts across the media sector.
Internet companies also are not immune to the changes. Time Warner Inc's (TWX.N: Quote, Profile , Research) AOL Internet unit is in the midst of cutting 5,000 jobs, or 26 percent of its workforce, as it shifts its business to a model based on Web advertising.
As readers spend more time on the Web, advertisers are not far behind in moving their marketing budgets online. While most companies in the industry are building up their Internet sites and distribution to capture the growth, that has yet to offset weakness at their mainstay print or broadcast businesses.
Internet ad spending is forecast to rise 13 percent in 2007, while network television advertising is seen almost flat from a year ago and newspaper advertising is expected to drop nearly 3 percent, according to media tracking firm TNS.
Not only are newspapers vying with other news organizations for audience share, they are competing with bloggers, industry experts and gossip sites, Challenger said.
"This dilutes their audience and dilutes the amount of money they can charge advertisers, which currently is the primary source of revenue for online news sites, since most are not charging subscriber fees to access their content," Challenger said.
