NEW YORK (Reuters) - Time Warner Inc’s Time Inc, the world’s largest magazine company, plans a restructuring that could lead to as many as 600 job cuts, or about 6 percent of its work force.
The move comes in response to the onset of the world financial crisis, which is aggravating an already difficult decline in advertising spending at U.S. newspapers and magazines, particularly as more people shun printed publications in favor of free information on the Internet.
It affects some of the most well known U.S. magazines, including the Time weekly news magazine, People, Sports Illustrated and Fortune. All these titles are part of parent company Time Warner Inc, which owns the AOL Internet service as well as CNN, the popular cable news television network.
“Industry conditions have been challenging due to the financial crisis, which has produced sharp decreases in advertising spending. This is expected to continue through most of 2009,” Time Inc Chairman and Chief Executive Ann Moore wrote in a memo on Tuesday to employees that was obtained by Reuters.
She said it was a challenge “unlike any we’ve seen before.”
“It’s important that we at Time Inc react quickly to this new reality in order to maintain our financial strength, build our market position, and sharpen our ability to bounce back at the first signs of economic recovery,” Moore wrote.
Time does not plan to close any magazines as a result of the restructuring, a spokeswoman said.
The New York Times reported that 600 people would be cut, but a source briefed on the plans said the likely number would be 300 to 600.
Not all the changes have been set in stone, and some will be announced in the coming weeks. The primary import of the changes will be to group editorial and business functions under a small group of people, as opposed to the longstanding tradition of various editors and publishers holding discrete power over their respective titles.
Moore already was working on changes at Time, but had to speed them up because of the financial crisis and a possible recession, the Times reported.
It is unclear what effect the restructuring will have on Time Warner’s financial results, either in terms of savings or of charges to the bottom line. Time Warner Chief Executive Jeffrey Bewkes previously said that Time Inc had lagged expectations this year.
Time Inc officials declined to comment on specific changes and the number of layoffs planned.
Time Warner, which also owns Turner Broadcasting, the Warner Bros movie studio and the HBO cable network, is among several media conglomerates dealing with a wider loss of advertising, the financial crisis and changing tastes of an ever more Internet-based public.
The company has been in talks about selling its AOL unit to Internet search and advertising company Yahoo Inc.
The moves at Time Inc will also allow the company to focus more on the Web versions of its big titles as more people get their news online.
In addition, the magazines will share more of their editorial talent. The New York Times pointed out one recent example — Fortune columnist Allan Sloan’s story about the financial crisis co-written for a recent issue of Time magazine with Fortune Managing Editor Andy Serwer.
Time plans to classify its 24 U.S. magazines and Websites into three umbrellas, focusing on news, style and entertainment, and lifestyle properties. The latter group includes titles such as Cooking Light and Southern Living.
The editorial divisions will report to Time Inc Editor-in-Chief John Huey, while Martha Nelson will oversee the style and entertainment business unit.
In the business operations, Moore will run the style and entertainment magazines, while executive vice president John Squires will run the news business unit, including Time, the Fortune|Money Group and the Sports Illustrated group.
The lifestyle group will be run by Sylvia Auton, another executive vice president.
Consumer marketing and sales teams will report to Brian Wolfe, who was promoted to executive vice president. Kerry Bessey and Maurice Edelson both were promoted to executive vice presidents of Time Inc.
Time Inc also will create an advertising sales and marketing group to handle sales across all of Time’s magazine brands, something Moore said was critical because of the difficult ad sales environment. The unit will be run by Stephanie George, also a Time executive vice president.
Additional reporting by Phil Wahba; Editing by Bernard Orr