TP Internet dumps entire editorial staff to reduce costs
The recent sacking of a team of journalists at TP Internet likely resulted from the firm having to cut costs due to the growing competition from other portals as well as a lack of adequate ad revenue, IT analysts said last week.
TP Internet (TPI), the online division of telecom firm Telekomunikacja Polska, which operates the portal.pl web site, last Monday fired 21 in-house journalists who provided content for its site, according to Renata Palen, TPI's spokeswoman. Jacek Podgorski, the director of the firm's online editorial department also lost his job, she said.
Palen said that TPI fired its in-house editorial staff as part of a portal restructuring plan to reduce operating costs, but gave no further explanation for the job cuts.
"The only reason people were dismissed was that we decided to change the structure of the portal, focusing more on outsourcing content and resources," Palen said.
TPI now will rely solely on content from other news agencies, she said, whereas previously the firm had used a combination of in-house content and news agency reports. Palen said the company's savings from the outsourcing would be substantial, although she declined to name a figure.
Portal.pl started operating last May and is one of about 10 horizontal, or general topic, portals in Poland many of which also began operating this year. The start-ups must compete with the country's two most popular portals, Onet and Wirtualna Polska, for both users and ad revenue. As a result of minuscule ad revenue, some firms, such as TPI, have started to realize that they must scale back their operational costs, analysts said.
"Polish portals expected ad revenue to be higher, and they also expected that market sentiment for internet companies would be better," said Michal Buczynski, an internet stock analyst at Centrum Operacji Kapitalowych Banku Handlowego. He predicted that the number of horizontal portals would remain stable during the next few months, but that eventually a consolidation process would occur with some sites ceasing operations or merging with others. After the consolidation, only two to four major horizontal portals would exist, he said.
Benita Mikolajewicz, an equity and IT analyst at ING Barings, agreed that ad revenue for the portal start-ups has not provided enough money to cover operating expenses, and that in the future more portals may have to outsource some of their in-house activities to reduce costs. Since most of the portals are still fairly new, however, they must use their existing financial resources "to strengthen their positions and brand names," she said.
However, Mikolajewicz disagreed with Buczynski's outlook on the consolidation of Polish portals. "The big portals like Onet and Wirtualna Polska will continue to dominate because their positions are stronger," she said. "But I don't think these (smaller) companies are willing to consolidate to get bigger and better because at this stage they all believe they have the best offer and will (continue to) rely on their own resources."
