With Wall Street frowning on unprofitable Internet ventures, media companies have been doing their part in the dot-com downturn, citing profit pressures and an advertising slowdown as they cut staff in their online units. NY Times cuts jobs at Net division News Corp. shutters online division Big Media's pullback from the Internet accelerated in the last week with announcements from News Corp. and The New York Times.
Some analysts say more bloodshed is on the way.
No one is talking about giving up on the Internet entirely. The question is how to maintain an online presence without making investors unhappy with costly operations at a time when slow advertising is hurting the core businesses of publishing and broadcasting. ''With the shrill of the Internet frenzy behind us, companies like the New York Times and News Corp. see that having an Internet presence to support and complement their franchises is certainly valuable, as long as its done in a fiscally prudent way,'' said Edward Hatch, media analyst at SG Cowen Securities. Some companies are finding that it no longer makes sense to have their Internet units operating as stand-alone businesses. Discovery Communications made a similar move last fall, drastically scaling back its plans for online expansion and scrapping projects that would have created broad-based online destinations. Instead, Discovery's Web sites will be much more closely aligned with its cable channels such as Discovery and Animal Planet while also providing marketing support for them.