TIME’S A WASTIN’: High-level Time Inc. employees filed into their quarterly corporate meeting at the Time-Life Building in New York Monday morning not sure of what to expect. Rumors of deep cost cuts — $125 million according to media reports — layoffs and a possible delay of its spin-off into the second half of 2014 from parent company Time Warner loomed as chief executive officer Joe Ripp took the stage. Accompanied by chief content officer Norman Pearlstine and chief financial officer Jeffrey Bairstow, Ripp laid out the company’s plan and answered questions.
Contrary to reports citing the back half of 2014, Time Inc. is (still) aiming for the second-quarter for its initial public offering, an insider told WWD. As a result, the executives told employees it was working on a five-year plan to get ready for the spin-off, which included putting together a board — and cutting costs.
According to a source, during the meeting an employee asked if the company would slash $125 million from its budget and begin laying off employees. A “straightforward” Ripp confirmed that there would indeed be layoffs, but that he didn’t know how many or when the cuts would take place. One source who was present at the meeting said it is “highly unlikely” that layoffs would take place before Christmas in light of the spin-off timetable.
In July, Time Inc. cut 500 employees nationwide.
In regards to the $125 million figure, Ripp said he didn’t know where that number came from since he had yet to receive his annual budget. However, in a memo to employees obtained by WWD, the ceo left no doubt about the challenges ahead. “We must reengineer how we operate our business.…Our revenue has declined 30 percent over the past five years, newsstand trends are not good and this company has been shrinking without investment for too long. We need to get ahead of the curve if we are going to attract a strong shareholder base.”
On a more positive note, merit-based salary increases would be enacted again, after they were frozen for a year, and People, the company’s cash cow, would add some luster to its pages with a better paper stock.
A Time Inc. spokeswoman confirmed that beginning with its Oscars issue in March, People would use a 38-pound stock, up from its 29-pound stock paper. The better paper won’t impact the price of the magazine or the price of advertising, the company said.
While the meeting was by no means uplifting, it wasn’t a total drag either, a source said, likening Ripp’s speech to a “call to action.”
“It’s the company’s fourth management team in five years,” an insider noted. “The meeting wasn’t sugarcoated but there’s a commitment there and a feeling that it can be done.”