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Topsizing at Analog Media Companies

Kegan Research reports, when newspaper tycoon William Randolph Hearst went on overseas shopping binges a century ago, some of his reporters would lose their jobs to offset his lavish spending. Throughout media history, layoffs usually hit the lower echelon the hardest.

But in the current round of staff cuts roiling traditional media, the axe is chopping a lot senior managers. In recent weeks, layoffs to reduce overall headcount included the president of Time magazine, station managers at big-city TV stations owned by Tribune Co. and the top executive at trade newspaper Hollywood Reporter.

"There is a lot of strong executive talent sitting on the sidelines now and there aren't a lot of senior jobs open," observes executive recruiter Bill Simon, senior client partner in the global entertainment/media practice at Korn/Ferry International. He believes that cuts among senior and mid-level managers will continue for the foreseeable future due to several forces.

Media companies want to flatten their organizational structures to make operational staff more accountable, which means stripping out management layers. Media mergers result in duplication that trigger layoffs. Automation and outsourcing lessen the workloads of management, which makes management staff a cutback target. Financial pressures are also a factor because eliminating senior management zeros out big salaries. Finally, there's a desire to elevate junior managers already on a fast track to the executive suite, so they don't job hop.

Media is a highly profitable industry. Traditional media companies in newspapers, broadcasting and magazines are cutting bosses in part to prop up profitability amid weak ad sales. Traditional analog media faces a drain from fast-growing and high-margin digital media like the Internet and cell phone TV � the growth side of the industry, according to newsletter Kagan Media Money.

Some might wonder if veteran managers are considered expendable because new-wave digital media requires a different skill set and sensibility than traditional analog media, which leads to a bit of deja vu. During the late 1960s and 1970s when Hollywood foundered as its core middle-aged audiences gravitated to TV, the studios out of desperation hired hordes of "pony tails" � hip long-haired directors and producers. The young talent brought back prosperity by focusing on the youth audience with counterculture Easy Rider and Star Wars.

Simon disagrees that veterans are out of favor today, saying consolidation among media companies makes them more complex to run, requiring experience and depth only experienced managers possess. He adds that hot areas right now in executive recruitment are mobile TV content and various types of games.

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