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Turner Broadcasting offers employee buyouts, plans more staff cuts

EntertainmentBusinessTelevision IndustryTelevisionJob LayoffsMedia IndustryTime Warner Inc.
Turner Broadcasting includes such channels as CNN, TBS, TNT and Cartoon Network
Turner is a unit of Time Warner, which fought off a takeover attempt by 21st Century Fox this summer
The Turner networks produce more than a third of Time Warner's revenue

Grappling with ratings doldrums and increased competition, Turner Broadcasting plans to cut several hundred workers as part of an overhaul of its operations.

On Tuesday, the Atlanta cable TV programmer notified employees that it was offering buyouts to older workers who have been with the company at least 10 years. The unit, which employs more than 13,000 people worldwide, is planning further staff cuts to focus resources on areas of growth.

Turner Broadcasting comprises such channels as CNN, TBS, TNT and Cartoon Network.

The Turner networks long have been sturdy revenue engines, but in recent years have been eclipsed by competitors — including Fox News Channel and entertainment outlets such as FX and AMC — that have fielded more daring shows. In addition, cable networks industrywide, including Turner, experienced softer-than-expected advertising sales during this summer's advertising sales period.

The voluntary buyouts are being offered to fewer than 600 U.S.-based employees over age 55. It is the first step of a comprehensive restructuring that was initiated three months ago by recently installed Turner Chief Executive John Martin.

"We'll start 2015 a more streamlined, nimble and efficient company focused on driving programming, monetization and innovation, in a culture that emphasizes and rewards continuous improvement," Martin said in an email to employees last week.

Turner is a unit of media company Time Warner Inc., which fought off a takeover attempt by Rupert Murdoch's 21st Century Fox this summer.

Time Warner Chief Executive Jeff Bewkes and other board members refused to entertain discussions with Murdoch, so now the company is under pressure from Wall Street to demonstrate that remaining independent is a superior strategy. Analysts are looking for Time Warner to provide details on how it intends to grow its profits and stock price.

After rejecting Fox's $80-billion bid, Time Warner promised that it would lay out a comprehensive business plan sometime this fall.

The company has signaled to Wall Street that it will make cuts companywide, but Turner is the first to initiate the process and is likely to suffer the bulk of the cuts. Time Warner also owns Hollywood's largest movie and TV studio, Warner Bros., and premium channel HBO.

Fox's short-lived pursuit caused Time Warner's stock to soar; it traded above $85 a share for a few days last month. After Fox pulled its offer, Time Warner shares plummeted, irritating some investors.

Nonetheless, Time Warner shares rose 3 cents Tuesday to $76.98, 8% higher than when the Fox offer became public.

Analysts have looked at several scenarios for Time Warner to increase its profits. Among them is being more aggressive with its delivery of HBO, including offering the channel as a stand-alone Internet service similar to Netflix. Others have suggested spinning off HBO, but knowledgeable executives say the company has no intention of separating the business.

In early June, Time Warner spun off its magazine unit Time Inc., which includes People and Sports Illustrated, into a separate publicly traded company.

The Turner networks produce more than a third of Time Warner's revenue. In the most recent fiscal quarter, Turner generated $2.75 billion of Time Warner's $6.8 billion in revenue. Turner revenue was up 5% from the year-earlier period. Its operating income was $929 million, an increase of 14% over the year-earlier period.

Since late September, TNT's prime-time audience is down 6% while CNN experienced a 25% drop, according to ratings agency Nielsen.

To be sure, CNN's ratings in fall 2012 were boosted by interest in the presidential election, providing a lopsided comparison. The news network posted a strong second quarter of 2014, outpacing rival MSNBC to come in second behind Fox News. During the last month, CNN's prime-time audience is up 45% compared with last year, boosted by the unrest in Ferguson, Mo., and the Israel-Gaza situation.

TNT also has delivered stronger numbers this summer, producing six of the top 10 scripted shows in prime time on cable, led by "Rizzoli & Isles" and "Major Crimes."

Tuesday's announcement at Turner affects about 7% of its 9,000 workers in the U.S. On-air talent at the networks, and workers who have employment agreements, are not being offered the buyouts.

Turner Broadcasting also includes HLN, Turner Classic Movies and truTV.

Twitter: @MegJamesLAT

Copyright © 2014, Los Angeles Times
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EntertainmentBusinessTelevision IndustryTelevisionJob LayoffsMedia IndustryTime Warner Inc.
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