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The media recession: Internet Broadcasting Systems layoffs

Internet Broadcasting Systems, the St. Paul-based builder of local TV websites, has let “just under 20 employees” go, according to an Oct. 21 company memo.

Locally, “IB” is best known as the creator of what was then WCCO’s Channel 4000. That station now has its own website, but IB has grown, building websites and applications for other local affiliates, though none in the Twin Cities. (Minneapolis mayor R.T. Rybak is a former IB exec.)

In June, Silicon Valley Insider, quoting unnamed sources, said NBC was taking its owned-and-operated affiliates away from IB — which, in addition to the crappy economy, could be one reason for the cutbacks.

IB spokeswoman Ayme M. Yaiser wouldn’t comment on the impetus or confirm memo details, because MinnPost obtained the document (reprinted below) from unauthorized sources. I also didn’t get IBS’ current headcount, though the station claims 70 local websites and a 16-million-user network.

IB operations are spread throughout the country, so it’s unclear how many layoffs affect locals. Also uncertain are the job descriptions: IBS has software developers, ad operations along with writers and other content creators.

Here’s the memo from David Lebow, IB’s President and CEO:

As you know from our ongoing dialog, IB is proactively managing our business and our financial results in the interests of long term health. The economics of today’s business climate are challenging. You’ve heard about our emphasis on growing revenue.

Balanced with our optimism for IB’s long term outlook is the economic reality of today. The country has not seen an economy like this since the 1930’s. The local advertising forecast is positive, and publishers are spending to convert their audience to the web. At the same time, our publisher business serves television stations, a business that is under tremendous pressure. We are a function of our customers’ business and must share some of the pain. 

To prepare for the future and respond to the economy and business conditions, we’ve instituted measures to reduce expenses. The difficult news is that today we notified just under 20 employees that they are impacted by a reduction in the size of the workforce at IB. This decision was made after much consideration and deliberation.  

As difficult as a reduction in staff size is, there’s no question that IB needed to make this decision. The economy is forcing many companies — and employees — into this situation. It is important for IB to make the technology and service investments we need to transform our business and to be profitable and preserve cash.  Our company challenge is to hit our revenue targets, and stay on a growth path while keeping our costs in line.

From an individual standpoint, it’s most difficult for the people impacted.  It’s also hard to say goodbye to people we’ve worked with side by side — people we like and respect. IB has worked to put in place meaningful help for our departing employees, treating them fairly, with respect and care.  I hope you will join me in thanking these employees for their efforts and contributions to IB.

From a company standpoint, I don’t want anyone to be alarmed, nor naïve, about how challenging these economic times are. We are fortunate to have strong backers and owners. We are investing in the future.

At the same time, these are unprecedented waters.  My judgment is that a conservative approach to spending is the way to preserve the growth of the company long term. Unfortunately this means making decisions that adversely impact some people we care about in the interests of ensuring our overall future.

I hope you will join me in thanking our colleagues for their contributions.  Further, we’ll be discussing this at our all company meeting next week, followed by meetings with each department in the company to answer your questions.

Thank you.

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