MGM pinkslips 80
Overhead reduction to result in further cuts
An MGM spokesman confirmed the job cuts, which equal approximately 7% of the company's workforce and said every division was affected, including consumer products, film, TV, licensing and legal, and "no one area had more than another."
Contrary to previous reports that the "selective" cuts would be issued only to VP and below, among those cut Wednesday were such high-ranking execs as Rick Phillips, exec VP of international networks at MGM TV; Andy Gruenberg, exec VP of domestic theatrical distribution; and Richard Longwell, senior vice president of MGM home entertainment.
The film production unit appears to be the least affected by the cuts, although some staffers in the public relations and marketing departments were among those let go.
In an internal memo, MGM/UA chairman Frank G. Mancuso, informed employees of the cuts and said that "all affected employees will be treated fairly and will be offered a minimum of six months salary, together with health benefits and any accrued benefits. Eligible employees will also be provided with outplacement assistance."
MGM is expected to make additional cuts from its 1,080-employee roster into the fourth quarter with reductions in all departments and some senior positions. The future cuts, however, will number fewer than the 80 let go Wednesday, studio sources said.
MGM also expects to take a third-quarter charge for severance payments and other costs associated with the layoffs, but the exact amount of the charge was unknown.
"This is an ongoing process, and I'm not sure if anybody has attached a firm date" on when cost-cutting efforts will end, said one studio source.
The company plans a $500 million rights offering to raise cash, and owner Kirk Kerkorian has agreed to acquire 90% of the rights -- an amount that equals his stake in MGM following his buyout of partner Seven Networks Ltd .
(Reuters contributed to this story.)
