AOL Time Warner eliminates 2,000 jobs

The newly joined media giant begins to cut positions across its numerous divisions to kick start profits.

Compiled from Times wires

© St. Petersburg Times, published January 25, 2001

AOL Time Warner slashed more than 2,000 jobs and said an additional 3,800 at the company's Warner Bros. retail stores could be axed as the New York media giant moved swiftly to streamline operations and cut redundancy after its Jan. 11 merger.

The cuts, announced to employees Tuesday, will hit the company's music business, its America Online division, the Time Inc. magazine company and its movie studios. Coming less than a week after a major revamp at CNN, the cuts are part of an overall belt-tightening drive to make good on a promise to investors that the merger would deliver a major boost to earnings.

"In no area are we cutting into the muscle of the company," AOL Time Warner spokesman Ed Adler said. "We need that muscle to grow and compete. These changes will sharpen our focus, capture synergies for growth and strengthen the integration of our company."

Combined with the 400 positions eliminated last week at CNN, the total of 2,400 job reductions would represent about 3 percent of the company's work force of 85,000, Adler said Wednesday.

The job toll could rise even further over the coming months if the company ends up closing its 130 Warner Brothers retail outlets. The company is hoping to sell the stores but may close them if a sale proves impossible, Adler said. There are two Warner Brothers Studios stores in the Tampa Bay area, at Citrus Park Town Center and Brandon TownCenter. Warner Music Group, another division that senior management has singled out for poor performance, will lose 600 jobs.

The Time Customer Service operation in Tampa, with about 2,000 employees, won out over a much smaller facility in Birmingham, Ala. About 400 jobs will be lost in Birmingham, where workers fulfilled subscriptions for magazines such as Southern Living and Progressive Farmer, published by Time's Southern Progress subsidiary. Subscription servicing for those magazines will be absorbed into the workload of the Tampa facility, but no jobs are expected to be added locally.

Another 100 jobs will be cut at the Warner Bros. movie studio, where the Entertaindom.com Web site is being melded into the studio's own site, and another 100 jobs are being shed at the company's corporate headquarters.

Separately, Time Inc. also is eliminating three of the 20 consumer magazines it acquired last year in its purchase of Times Mirror Magazines from Tribune Co. Senior Golfer magazine is being combined with Golf magazine, Outdoor Explorer is being closed, and Today's Homeowner is being merged into This Old House magazine. A total of 40 jobs will be affected in addition to the 400 cuts announced at Time Inc.

AOL, which is now a division of the merged company AOL Time Warner Inc., will reduce 725 positions across the division, including a number at AOL's former headquarters in Dulles, Va.

Analysts say AOL Time Warner is moving aggressively to cut costs in order to meet its goals for revenue and cash-flow growth. AOL Time Warner is scheduled to announce its first earnings as a combined company Wednesday.

A slowing economy and falling advertising revenue have raised doubts about AOL Time Warner's ability to hit its original targets of 12 percent to 15 percent revenue growth and 30 percent growth for cash flow.

"They are going to need to tighten the reins if they want to make their numbers," said Stephanie O'Neil, analyst at Friedman Billings Ramsey.

AOL Time Warner shares rose $1.60 to $55.75.

CNN also is installing several new executives, overhauling its newsgathering infrastructure and shaking up its programming schedule to get ratings out of a slump. Other divisions of the conglomerate are not facing cuts this time. The WB broadcast network and the cable systems operations did not have any job cuts, and the HBO cable network already implemented a 10 percent job reduction over the past year.

-- Information from the Los Angeles Times, Associated Press and staff writers Mark Albright and Kris Hundley was used in this report.

© 2006 • All Rights Reserved • St. Petersburg Times
490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111

Contact the Times | Privacy Policy
Standard of Accuracy | Terms, Conditions & Copyright