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

What Walks Out the Door (when great senior people are let go)

Is the gold watch for thirty years of service something that is gone now forever? Are jobs now like winter hats that you wear for a few years and then trade in on a new one? Is every employee an interchangeable cog to be pulled and replaced without consequence?

As discussed in Decline of Print Media Sales late last week, 250 time staffers continue to wait for the announcement of their layoff. It was announced today that five senior staffers are already gone through early retirement, layoff, or leaving to pursue other interests.

As, Lucia Moses reports in Mediaweek:

--Fred Nelson, VP of digital media for Entertainment Weekly, whose job was eliminated when EW adopted a new management structure. He had been at Time Inc. about 10 years in various positions. His last day was Jan. 8.

--Art Berke, in mid-February after 18-plus years as head of communications for Sports Illustrated. A search for a successor is underway.

--Time magazine's Michele Stephenson, who took early retirement Jan. 5 after 19 years as director of photography and before that, serving as deputy picture editor. Picture Editor MaryAnne Golon was named to succeed her.

--Carrie Welch, vp of communications for the Time Inc. Business and Finance Network, who is leaving Jan. 19 after 25 years at Time Inc. for Lowe Worldwide as executive vp in a communications role. No word yet on a successor.

--And Fortune's executive editor Bob Safian, who left for Mansueto Venture's Fast Company, where he'll be editor and managing director.

I am reminded of an old adage that an agency president once said, “100% of my inventory goes home at 5pm.” The people were his product. He had no widget to sell. The product of his agency was the quality and experience and ability of its people.

Time Inc. may well have been overstaffed and the trimming of these jobs and the hundreds more to follow may well be prudent. It might also have made excellent sense for the board in their duty to the stockholders to maximize profitability and curry wall-street favor. It might even eventually lead to better magazines.

But, I can’t help but wonder what walked out the door with Carrie Welch, VP Communications, after 25 years of service. What knowledge is she taking with her that they will not even miss until silence follows a question she would once have answered? What insights left the building with Michele Stephenson after 19 years as Director of Photography for Time Magazine? What did she know after two decades of selecting photographs for the pages of Time Magazine that wasn’t written in the Monster.com job description?

Perhaps the more profound question is whether or not anybody cares? Is a 25-year veteran easily and instantly replaceable by a 25-year-old college graduate? Can we just move everybody up a chair and a title without impact? And, with the revolving door of celebrity CEOs and the average tenure of a CMO at 22 months, is there anybody that really knows the impact to the magazines?

I am reminded of a story about a woman that was laid off by a Fortune 100 company after a decade of service. Her specialty was that she knew more about the physical configuration of their stores than anybody else. She knew the depth of the shelves, the height of the racks, the clearance of the ceilings, etc. And, since there were dozens of store designs, across dozens of states, this was quite a challenge.

She was well-compensated and managed the group that produced in-store signage and coordinated and negotiated with external print vendors. She was laid off along with dozens of other employees in a cost-reducing move. Some time later, there was a print job that was produced to incorrect specs. Nobody caught the fact that it wouldn’t fit inside the stores because everybody relied on her for such details and she was no longer there. That one mistake with reprinting, reshipping, reinstalling, etc. cost more than ten times her annual salary.

It would be an excellent moral of the story to say that the company discovered their mistake in letting this valuable resource go and hired her back. Perhaps even saying that they hired her back to HELP in their efforts to reduce costs. It would be nice to envision Richard Gere climbing her balcony, a la Pretty Woman, and begging her to return.

As you might have guessed, this was not the case. In fact, the company had already recognized the benefit on wall-street for the layoffs and they just couldn’t seem to find anyone to blame for the mistake. After all, it wasn’t anybody’s fault. Nobody could be expected to know the dimensions of all the different store designs, could they?

In this movie, the Pretty Woman took her severance package, spent some time emotionally recovering from getting canned in her forties for the first time, then got her next job making more money and moved on with her career.

As our peers at Time Inc. might tell us, perhaps in today’s corporate environment, if you want a gold watch, you should go ahead and buy it for yourself.

--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