CNET Cuts 10% Of Workforce, Effective Immediately (Updated With Internal Memo)
Duncan Riley
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CNET has announced that it will cut 10% of its workforce, or 120 people, effective immediately, in a move said to help it “focus on long-term growth amid complaints from some investors.”
CNET has had no shortage of headlines recently, from changes at the top through to an ongoing battle for control against largest shareholder Jana Partners.
According to an internal memo from CEO Neil Ashe, the restructure will include stronger emphasis on centralized services in areas like IT architecture, SEO, yield monetization, Facilities, Legal, HR and Communications.
Business Unit Realignment: with the introduction of an open API, “CNET will move its services, catalog, content management system onto one platform, making content development, syndication and content import easier and more open.” CNET has realigned its investments in TechRepublic and ZDNET “to improve monetization,” although exactly how and in what form was not specified. TV.com will be abandoning its emphasis on video for more (we presume low cost) content such as “entertainment features, breaking news, trivia competition, and polls.”
International: CNET is considering raising local capital to expand in China, but the rest of the international business operations appear to be subject to a review with an announcement in weeks, by that we presume that CNET may be closing some international sites.
Restructure costs: $3.5 million and $4 million to be accounted for in Q1, 2008.
More when we have it. Staff being terminated were to be informed at 2pm PST.
Update: Programmer Robert Balousek is one of the first reported casualties.
Update: Here’s the full text of the internal memo from Ashe:
Hello Everyone,
We all recognize that we must continuously change to be successful, and we embrace change. At the beginning of the year, we talked about our focus on category defining brands and the need to drive greater efficiencies in the business. As part of that process, in late January, I asked Zander to lead a task force to evaluate our current organization and resource alignment.
The task force evaluated the following areas of our business: organizational construct, technology infrastructure, editorial development and go-to-market strategies. Our focus was on creating a leaner centralized organization that provides expertise and best practices around areas of excellence, efficiency, and governance such as IT architecture, SEO, yield monetization, facilities, legal, HR and communications; evolving our editorial teams so everyone is focused on content creation; innovating our technology infrastructure to embrace open APIs and drive more efficiencies throughout the organization; and finally, simplifying our sales approach by building on the traction of our partner account strategy.
Based on that business analysis, today, we are making significant changes to the organization. This includes the very difficult decision to make a workforce reduction that will affect 10 percent of our U.S. workforce or about 120 people. These changes allow the company to put greater focus on its leading brands, as well as help drive efficiencies throughout the business.
CNET Networks is made up of great employees who have all contributed to the success of the company. While the changes we are making are part of our long-term growth strategy, I understand that it doesn’t make it any easier to see our friends and colleagues leave us.
Today, employees have been meeting with their managers to hear more specifics on how these changes impact their individual roles. Anyone who is impacted will be informed by 2 p.m. Pacific Time. Resources will be in place to help all employees manage through this transition, including outplacement assistance services and support from employees’ managers and HR.
Let me provide you with an overview of the changes we are making.
Refocusing Central Services are realigning our centralized services. We will look to central groups to provide expertise and best practices around areas of excellence, efficiency, and governance. This includes areas like IT architecture, SEO, yield monetization, Facilities, Legal, HR and Communications.
Operations
Operations is a newly formed organization led by Sam Parker that covers the full breadth of our shared IT and product services. This group integrates our enterprise business systems and network groups into one team.
As part of this change, I’m pleased to announce that Ned Rhinelander is taking on the new role of VP of IT Architecture. In this new role, Ned will track technology choices and adoption across the company, identify opportunities for efficiencies and innovations, and work closely with business unit engineering leaders to set shared standards and directions. Sam and his team will work to continue to find ways to drive efficiencies, ensuring we get the full benefit from our scale, and our brands have an advantage in the markets in which they compete.
Sales
Dave Morris will take on the role of Chief Client Officer reporting directly to me and joining the executive committee. In this role, Dave will drive our revenue strategy including our management of partner accounts, network-wide advertising programs, and the Detroit auto market. Dave will also oversee a go-to-market sales strategy that supports the company’s revenue plan, as well as business operations and network product marketing.
We are making these changes to simplify our sales organization and to build on the early traction of our partner account strategy. The existing corporate accounts will become part of the partner accounts program. The partner accounts program allows the company to have an integrated sales approach that benefits from the expertise and talent we have throughout the organization, while at the same time allowing key marketing partners to realize the power of all of our leading brands.
Dave will be the Chairman of the Revenue Council and have the authority to create and drive company-wide revenue initiatives. Dave will also have a small team that will leverage the BU marketing organizations to support the company’s network initiatives. Finally, Jack Haire will be returning to his Special Advisor role and will continue working with me, Dave, and the executive committee.
Corporate Communications
Centrally, we will have a global corporate communications team focused on public relations and internal communications. Managed by Sarah Cain, this team will be responsible for building strategic plans and programs to effectively communicate our messages externally and internally. All other marketing will be handled at the BU level. Sarah will report directly to Mickey Wilson as they determine how this organization evolves.
Business Unit Realignment
At the BU level, resources are being realigned to support key strategic initiatives that represent the biggest opportunities and drive greater efficiencies. Here are some highlights from those changes:
With the move to an open API, CNET will move its services, catalog, content management system onto one platform, making content development, syndication and content import easier and more open
Within the business group, we have preserved our core investments in BNET, while aligning more of our resources to accelerate the brand’s growth. At the same time, we have realigned our investments in TechRepublic and ZDNET to improve monetization.
TV.com will put more emphasis on areas of most interest to their audience including entertainment features, breaking news, trivia competition, and polls, rather than original video programming
Stay tuned for more information about specific changes to your BU from your business unit leaders.
International
Lastly, as I talked about during last quarter’s earnings call, to further accelerate growth and leadership in China, the company is considering raising capital from local partners. We are also in the process of making additional decisions about our international business. I will be sharing more information about that in the coming weeks.
Today, difficult decisions were made. Each individual that was affected by these changes deserves our respect and gratitude for helping to make CNET Networks into the company it is today. And, while it is never easy to see our friends and colleagues leave us, together, we will work through this transition and stay focused on our goal to grow the company’s brands, revenues, and profits.
Best, NA
