In a memo to staff last week, Time Inc. (NASDAQ: TIME) announced it would cut 300 jobs through layoffs and buyouts, reports USA Today. The jobs to be eliminated represent about 4 percent of the company's global workforce. More than half of the jobs to be cut are based in the U.S., and 40 percent will come from employees who accepted voluntary buyouts. Time Inc. owns more than 100 magazine brands including Time magazine, Sports Illustrated, Fortune, Life, Cooking Light, Food & Wine and Golf Magazine.
As part of a larger restructuring and ‘rapid transformation,' the job cuts will occur across various departments with a goal of eliminating inefficiencies and streamlining operations, and growing other areas including digital sales, product development, native advertising and video, says USA Today. Mathew Ingram, a senior writer at Fortune, is among those whose positions have been eliminated. Based in Toronto, Ingram frequently writes about media and technology.
We last wrote about Time Inc. in early May when Time Inc. said it evaluated sales opportunities, and rather than sell, would pursue its own strategic plan to reinvent itself.
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“Time Inc. is a reinvigorated company uniquely positioned to succeed in the multi-platform media marketplace with an exceptional set of brands and assets, tremendous scale and significant untapped potential. The Company is better positioned to capitalize on this potential with its recent shift from a siloed, legacy publishing structure, to an integrated, enterprise platform structure. We are excited to execute on our plan as we have become a leader in digital and remain #1 in print ad revenue share. In addition, our transformation has brought a number of potential partners interested in working with us to unlock and accelerate value across our portfolio of brands,” said Rich Battista, Time Inc. president and CEO.
Shortly after that announcement, Time released its first quarter 2017 financials, showing a total revenue decrease of $54 million, or 8 percent; a total advertising revenue decrease of $29 million, or 8 percent; digital advertising revenue growth of 32 percent, a print advertising revenue decrease of 21 percent, year-over-year. Battista blames public speculation for the decline in print advertising sales.
In an earnings press release dated May 10, Battista said:
“In the first quarter of 2017, we made important progress on our strategic plan despite continuing challenges with print advertising revenues. We are taking strategic actions and focusing on key initiatives to put the Company on the right course for the future. We are creating a more vibrant and valuable platform for our advertisers and consumers, further enhancing financial flexibility, aggressively reducing our cost base, rationalizing our portfolio and continuing to invest in transformational growth initiatives. Importantly, our Board of Directors' April 28 announcement affirming our strategic plan has removed a major distraction for our people and advertisers. While we have a lot of work to do, Time Inc. is very well positioned to emerge as a winner in the rapidly changing consumer and media marketplace.”
“Advertising revenues decreased $29 million or 8% in the first quarter of 2017 from the year-earlier quarter to $331 million reflecting a decrease in Print and other advertising revenues, primarily due to fewer advertising pages sold as a result of the continuing secular trend of advertisers shifting advertising spending from print to other media, lower average price per page of advertising sold and fewer issues served to customers, primarily due to a change in frequency. In addition, our print advertising revenues were negatively impacted by the public speculation about the ownership of the Company and the disruption from the reorganization of our advertising sales force,” he said.
It was not a good week for the media industry last week. Additional layoffs included Vocativ, who cut its entire editorial staff, about 25 employees, and HuffPost, who will lay off 39 people because of the Verizon acquisition of Yahoo and AOL merger. The eventual headcount following the merger would be about 2,100 employees, says Fast Company. On June 9, we wrote about The New York Times offering buyouts to employees, and in April, ESPN announced it would lay off 100 employees.
With all the rumors swirling around about Time Inc. this year, the layoffs aren't a surprise. Media companies big and small are trying to cut costs, streamline operations and reduce redundancies. What we find interesting about Time Inc.'s restructuring plan is its desire to lay blame elsewhere, particularly on “public speculation” about the company's exploration of a sale and on its restructuring of the ad salesforce.
Time Inc. is a legacy publisher that has perhaps evolved too slowly and taken much too long to shift its focus from print to digital. Blaming external sources for its own decisions is not going to improve the company's chances at a turnaround. Despite its declaration otherwise, Time Inc. might still be ripe for a sale.