Time Inc. CEO announces to staff another 300 layoffs coming due to ‘reengineering’ effort
The layoffs follow an announcement that the company had brought in a consulting company, and after a failed acquisition attempt by Meredith Corp.
Two weeks ago media observers, including TNM, reported that Time Inc. had hired McKinsey & Co. in order to “reengineer” the company. At the time I wrote that this could only mean one thing: layoffs would be forthcoming.
“We’re re-engineering our entire cost structure,” Battista told The Wall Street Journal. “We’re trying to be as nimble and efficient as possible, and get this process moving.”
When you know what the goal is, chopping heads, it is easy for the consultants to come in any recommend layoffs. Three hundred positions will be cut, or about 4 percent of the workforce. The cuts will effect the entire company, including at Time Inc. UK (formerly IPC), which well could be on the auction block.
“In our recent town hall meeting, I said that one of the key components of our go-forward strategy is reengineering our cost structure to become more efficient and to reinvest resources in our growth areas as we position the company for long-term success,” Battista wrote staff. “Today we took a difficult but necessary step in that plan as approximately 300 of our colleagues throughout Time Inc.’s global operation will be leaving the company. Some have been informed that their positions will be eliminated, while others have volunteered to accept buyout offers.”
This won’t be the end of the pain as the company already said that it plans to sell off some titles after the company could not come to an agreement with Meredith on a sales price in its effort to sell off the entire company.
Time Inc. stock took it on the chin following the failed acquisition effort by Meredith**, but has since recovered a bit and now is just under $14 a share. Meredith had offered $18 a share, but that was not seen as sufficient, likely because of the debt the company holds due to its spin off from Time Warner.
Few of the print publishers that have been spun off have fared well following the split, mostly due to the debt loaded onto them by the parent company. The exception is News Corp, which began life separate from the TV and film side (now called 21st Century Fox) with money in the bank and some other products besides print newspapers (like book publishing and its digital real estate unit). Still, even News Corp is struggling due to its US, UK and Australian newspaper properties being far less profitable than they were a decade or so ago.
Final thought: announcing layoffs at the end of a quarter is usually seen as a sign that the upcoming earnings report will disappointing that the CEO wants to be able to tell investors on the conference call that they’ve already taken actions. But investors are growing inpatient with Time Inc. and the turnaround that never seems to be coming. We’ll see if Q2 earnings shows any signs that the company is, indeed, turning a corner, or if cutting costs remains its only answer.
** Time Inc. reached out to object to TNM describing the recent bidding as a “sale”, saying “it is inaccurate. Time Inc. did not initiate a sales process.”