2 min read

Layoffs and leverage

Bad news today in the world of B2B journalism. Nielsen Business Media, formerly known as VNU, has laid off a number of editorial staffers. Folio magazine says it's "not immediately clear how many employees have been let go." While the FishbowlNY blog at Mediabistro says between 40 and 50 jobs have been eliminated and cites an anonymous tipster who claims "most cuts (are) coming from the company's digital and conference arms."

It's been a tough year and a half at Nielsen.  In that time the company has gone through a reorganization and name change, an ethics scandal and an earlier round of layoffs.
And my heart goes out to the folks who lost their jobs today. I know what that's like. I've been laid off in the past. It's a truly awful feeling.
But the truth is that all of us in B2B are vulnerable now. And all of us need to be prepared for the possibility of job loss.

Several months I wrote on this blog that I was worried that 2008 would prove to be an awful year for our industry. And every week seems to bring news that indicates I'm right to be nervous.
Many of the major players in B2B publishing are leveraged to the hilt. And they seem to have bet the house on being able to find extraordinary amounts of new revenue in the online world. But since so many B2B editors still don't get Web journalism, many B2B Web sites remain laughably bad. And as the economy slows down, I just can't imagine that people will line up to spend money on crappy Web sites.
Even the very best Web sites in B2B are in trouble this year. Over and over again I hear from people who are struggling with demands from senior management for levels of growth that simply cannot happen. The ugly truth is that when the economy slows, you can't expect an every-growing number of people to to line up to spend an ever-increasing amount of money on any Web site -- no matter how gorgeous, well-written, and filled with multimedia it may be.

I hope I turn out to be wrong about this. But I don't think today's layoffs will be the last we'll see in 2008.  I'm worried that things are bad. I'm worried that they're getting worse. And as I said just last week, because so many B2B publishers are "privately held, we just don't know how ugly the balance sheets may be."
(Note: Although Nielsen Co., the parent of Nielsen Business Media, is privately held, much of its finances are reported publicly. And things ain't pretty at Nielsen. Several days ago the company announced it would buy IAG Research for $225 million. To finance that purchase, Nielsen said it would sell $220 million in bonds. Or, in layman's terms, the company will borrow $220 million. But that new debt comes on top of some $8.47 billion in existing debt -- and that has the credit agencies shaking their heads.
Even prior to word that Nielsen would return to the bond market to borrow again, Moody's had rated Nielsen's last round of debt Caa1 -- some seven levels below investment grade!! That's about as junk-like as a junk bond can be.)

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