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Why Is MTV Laying Off? February 22, 2007

Posted by David Card in Media.
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It hasn’t lost touch with its audience, or fallen prey to the “disintegration of mass” as some might say. Actually, it’s pretty simple dollars and sense.

    This year, execs are expecting growth in the flat-to-5% range. For a network like MTV, which has been running a 24-hour rating in the .6 to .7 range, the implications of CPM growth expectations could be huge. It is currently garnering a CPM of about $10. Our tables show that cutting the CPM growth rate from 8% to 0% for a network with a CPM of $7 and a rating of .4 would result in $36 mil./year decrease in annual revenue.

According to colleague Derek Baine’s analysis, this situation might be even rougher on Nickelodeon, arguably an even stronger brand with deeper hooks into its audience than MTV’s.

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