Reduction in Force

Ann S. Moore, Chairman and CEO of Time Inc., announced today that Time Inc. will be cutting more than the 250 expected jobs. The total was 289 mostly editorial jobs.

Why should those of us outside of print media care? I addressed this question in a related entries Decline of Print Media Sales and What Walks Out the Door (when great senior people are let go).

Time Inc. has 150 titles (as of September 2006) with a several up for sale at the moment. They are owned fully by Time Warner, Inc. Four of their magazines were on Adweek's "Hot List" in 2006: People (#1), Real Simple (#3), In Style (#7), and Cooking Light (#8).

Culled from the Time Warner website about Time Inc.:

• Time Inc. magazines are read 340 million times each month worldwide by 173 million adults over 18 years of age.
• Two out of every three U.S. adults read a Time Inc. publication every month.
• As of June 2006, Time Inc. earned 22.8% of all domestic magazine advertising spending.
• Time Inc. ended 2005 with three out of the top four magazines in both advertising revenues and pages.
• People remained the #1 magazine in advertising revenue for the 15th consecutive year.
• Seven of the top 25 magazines in advertising revenues in 2005 were Time Inc. titles.

The problems facing Time Inc. are the same problems facing the entire magazine industry and the broader media industry. All of these media outlets that were swallowed up by huge corporations are now expected to maintain a level of growth that is often beyond what is sustainable. Mere profitability is no longer enough. For a media conglomerate, a modest success is today's definition of failure.

So, here is how the lay offs broke down at Time Inc. today:

• 117 jobs from the business side
• 172 jobs from the editorial side (50% have been offered packages, 50% are just losing their jobs)

Other casualties:

• Time Magazine closing bureaus in Los Angeles, Atlanta, and Chicago
• People Magazine closing bureaus in Washington, Miami, Austin, and Chicago

Recent History:

• 105 people laid off in December 2005
• 100 people laid off in February 2006
• 250 more in April 2006
• Closing Teen People in July 2006
• Pending sale of Time4 Media and Parenting Group assets up for sale in September 2006 (560 jobs)
• 27 people laid off in December 2006
• Sale of Progressive Farmer Magazine

A large part of this reorganization was designed to curry favor with Wall Street. At the time I am writing this (3:16pm on 1/18/07), Time Warner's stock, (TWX), is trading at $22.98 which is:

• Today's Open: $22.89 -- up $0.09 (~0.4%)
• Seven Days Ago: $22.50 -- up $0.48 (~2.0%)
• One Month Ago: $21.50 -- up $1.48 (~6.4%)
• One Year Ago: $17.00 -- up $5.98 (~26%)
• Today's High: $23.03
• Highest Point in Four Years: Today $23.03

--Carter Cathey
© 2007

Decline of Print Media Sales

Mediaweek Online just reported that Time Inc. is about to lay off as many as 250 people. The formal announcement is expected one day next week.

This continues a trend of compression in the world of print that has no end in sight. With the explosion of "new media" and the expectations of today's media consumer for instant information, magazine circulations and their advertising revenues have been declining. (There is an excellent report on The State of The News Media that is full of excellent detail on the trends in print media.) The magazines that are surviving are niche magazines, category-leader magazines, and magazines that have fully embraced and been fully embraced online.

Even news magazines now routinely break their stories on their website first rather than waiting for the distribution of their print editions. The staff at most magazines know that the core product moving forward is going to be the distribution of content online branded under the print edition's masthead.

As all media continues to converge, we shall see some media outlets flourish and others flounder. As a media seller, I think it would be a difficult time to be selling print. Selling Newsweek or People Magazine in New York is probably still quite lucrative. However, most magazines are facing more of a challenge.

For example, type Kitchen Remodel Magazine into Google and you get scores of options. The top several spots are for the major print magazines for the Kitchen Remodel industry:
--Remodelling Magazine
--Kitchen and Bath Design News Magazine
--Kitchen and Bath Business Magazine

Further down the list are a few other print magazines in this category:
--Home Remodeling Cape Cod and The Islands
--This Old House

All of these magazines are going after the same potential advertisers: manufacturers of flooring, faucets, counter tops, sinks, showers, tile, hardware, lighting, etc. These same potential advertisers are being courted by a dozen broadcast and cable outlets like HGTV Network and DIY Network. These are also the same potential sponsors for several major trade shows.

Budgets are stretching thinner and thinner and the second- or third-tier print remodelling magazine is not as easy to sell as it was ten years ago. These magazines get even harder to sell when the magazines are reduced in size and quality, key strategic leadership leaves, sales teams are smaller with larger territories, budgets are slashed, and the editorial offices have more empty desks than occupied ones.

Good luck to those managers that are leaving Time's magazines and the 250 other employees walking around with targets on their backs for the next week. I hope your severance packages allow you enough time to find work somewhere outside of print.

--Carter Cathey
(c) 2007