The ax finally dropped at Time Inc. — the company started its layoffs on Wednesday as it aims to reduce costs by $100 million across the publishing division. Memos to employees protected under the Newspaper Guild seeking volunteers for buyout packages were sent around, and staffers will have two weeks to decide whether to accept a package.
During Time Warner Inc.’s third-quarter conference call Wednesday, chief executive officer Jeff Bewkes said Time Inc.’s news division, which includes Time, Fortune, Money and Sports Illustrated, would incur most of the cost cuts. The changes include reducing the frequency of Fortune to 18 times a year from 25 and focusing the magazine’s coverage on the largest corporations. Time Inc. also will further pool the management and editorial teams across all the news group brands.
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Time Inc. on Wednesday shuttered Fortune Small Business, affecting at least one full-time staffer and another four or five employees who worked on that title as well as other projects. Fortune Small Business was moved to Time’s Custom Publishing division from the news group a year ago.
As for other changes, Time is looking for up to 12 union-protected volunteers, and Fortune, which is expected to be the hardest hit of all the titles, is hoping several designers, reporters, researchers and employees at other positions volunteer, but did not specify a number in memo to staffers. Sports Illustrated is also seeking a handful of volunteers, but dismissed about 15 to 20 sales and marketing employees on Tuesday.
People, part of Time Inc.’s style and entertainment group, is looking for eight volunteers.
At other titles not a part of the Guild, Essence let go of around a dozen employees, including at least four on the print editorial side with the rest coming from its Web site, and Entertainment Weekly cut about 11 staffers, mostly on the business side. InStyle laid off about six employees across both the editorial and business sides.
And the changes at Time Inc. won’t likely end there. Bewkes, during the conference call, said the company would also “continue to take a hard look at nonstrategic and less-profitable titles.” Though the number of total staffers to be laid off wasn’t confirmed by the company, reports put the number at between 400 and 550. This round follows Time Inc.’s paring of 600 employees last fall and some 250 staff cuts in early 2007.
During its third quarter, Time Inc. reported an 18 percent dip in revenues, to $914 million, with a 22 percent decline in advertising revenue and a 13 percent drop in subscription sales. Operating income fell 40 percent, to $97 million. Looking ahead, the company said fourth-quarter ad revenues and subscriptions are improving, with food, automotive and beauty advertising poised to show better numbers than last year.
Overall, Time Warner reported a 6 percent decline in revenue, to $7.1 billion, while operating income fell 10 percent, to $1.4 billion. Bewkes raised the outlook for the company’s earnings for the year, to $2.05 a share from $1.98 previously. The forecast includes the $100 million restructuring charge to be incurred in the fourth quarter. Bewkes also reiterated the company expects AOL to be spun off by the end of the year.
MSLO DECLINES: The publishing division of Martha Stewart Living Omnimedia posted a 21 percent drop in revenues for the third quarter, to $27.1 million, due to a decline in advertising pages, subscription revenue and lower newsstand sales. The division also reported an operating loss of $2.5 million, compared with a gain of $2.1 million during the same period last year. Revenues in MSLO’s Internet business declined 6 percent to $2.8 million, while the operating loss was $2.1 million versus a loss of $1.5 million last year. The company’s digital properties had record traffic in October, with 131.4 million page views and 5.6 million unique visitors. Total revenues for the company fell 25 percent to $49.7 million and MSLO increased its net loss to $12.1 million, from $3.7 million a year ago.
Kelli Turner, chief financial officer, said visibility for 2010 is limited, but in the fourth quarter the company expects a substantial improvement in performance across all businesses. Print ad revenue during the period is expected to be flat compared with the prior year, an improvement over the previous three quarters, which were down more than 20 percent. And Internet advertising is expected to post double-digit growth. The December issue of Martha Stewart Living will be the largest issue this year, up 21 percent to 161 ad pages. It will have a triple cover, sponsored by Garnier Nutritioniste.
Meanwhile, News Corp. reported first-quarter 2010 earnings on Wednesday, posting a 9 percent increase in operating income, to $1.04 billion, thanks to increases in filmed entertainment, cable network programming and book publishing. Net income rose 11 percent to $571 million and revenue fell roughly 5 percent to $7.2 billion. In the newspapers and information services segment, which includes the Wall Street Journal, operating income fell $109 million, to $25 million, as a result of lower ad revenue. Chairman and chief executive officer Rupert Murdoch said during a conference call with investors that the Journal is “barely” profitable. Previously, Murdoch had said all News Corp. Web sites would charge for content by 2010 but it appears that timeframe could be pushed out further now. “It’s a work in progress,” he added.