Reporters hate to hear of layoffs, especially if they're at that temple of magazine journalism known as Time Inc. But at least the House that Luce Built is outfitting those it cuts loose with parachutes that, while not golden, promise fairly secure landings.
Or so the 280 layoffs that Time filed with the New York State Department of Labor on Wednesday would suggest on being recognized as the core of a $100 million restructuring charge that the publishing division of Time Warner Inc. (NYSE:TWX) has in mind for the fourth quarter. The math works out to $357,000 per laid-off employee, pretty rich for almost any profession and certainly for journalism.
A Time Inc. spokeswoman confirmed the layoffs would represent "the bulk" of its restructuring charge that Time Warner chairman and CEO Jeff Bewkes referenced during the company's third-quarter earnings call earlier on Wednesday. But she added that the headcount reduction of 280 -- expected to occur between Nov. 2 and Jan. 31, according to the Dept. of Labor filing -- represented a best estimate. "We still have to go to the Guild," she said, "so we don't exactly know what the final mix will be."
Time Warner posted a third-quarter profit of 61 cents a share, beating analysts expectations, but the media conglomerate's publishing operations continue to struggle.
Announcements of the cuts come as revenue at Time Warner's publishing operations, which include magazines Fortune, Sports Illustrated and Time, fell 18% to $204 million as advertising revenue continued to falter, dropping 22% to $129 million. The number, however, came in lower than the 25% drop expected by UBS (NYSE:UBS) analyst Michael Morris. The third-quarter decline in publishing revenue was no consolation as CEO Jeffrey Bewkes looks to get smaller in its publishing division.
Analysts have speculated that Time Warner will unload Time Inc. or pare down the magazine holdings to a smaller number from its current stable of 23 titles. Selling Time Inc. in its entirety might not happen as Bewkes says he isn't giving up on publishing altogether, "[Some] 85% of adults read magazines, unchanged over the past decade and, in fact, readership in the 18-34 demo is actually growing," Bewkes said. "Magazines have unparalleled reach and relevance.
One thing Time Warner does have in its favor is its large war chest of $7.1 billion in cash, which doesn't put it in a hurry to make any hasty divestiture decisions. - Richard Morgan and Gerald Magpily
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