According to press reports this morning SMG has offered all of its employees voluntary redundancy as part of a cost-cutting exercise following a drop in profits for the first half of this year of over 30% (see SMG Profits Stung By Ad Slowdown).
In order to avoid forced redundancies, SMG has given its employees until the end of this week to to make a decision and will then consider the situation before deciding how many to accept.
The drop in profits resulted from the cost of growing its investment in Scottish Radio Holdings (see SMG Takes Scottish Radio Interest to 29.5%), the increased cost of ITV licenses and the deteriorating ad market. 40 jobs were cut last year at SMG’s operations and speculation this morning suggests that hundreds may go in this latest round of cuts.
Comment
SMG has been particularly badly hit by the ad downturn because of its TV ownership. Half of the group’s revenue is derived from its TV investments, SMG owns the Scottish TV and Grampian licences. Its investment in Scottish Radio Holdings has also come under criticism with some analysts now saying that SMG’s stake is now worth only half what the company paid for it. Scottish Radio Holdings announced a slump in profits just weeks after SMG increased its holding in the company to 29.5% (see SRH Cautious On Outlook As Ad Slowdown Hits Profits).
