Early Retirement Plan Is Offered to 2,000 at CBS; Layoffs Possible
CBS Inc. said Monday that it has offered a voluntary early retirement program with special benefits to 2,000 of its employees, or 7% of its total work force, as part of a continuing cost-cutting effort.
The broadcaster, which assumed $1 billion in debt in the stock buy-back that helped repel a takeover attempt by Atlanta-based broadcasting tycoon Ted Turner, said it may soon announce additional cost-cutting moves, possibly including layoffs.
“Naturally, the size of any layoff would be determined partly by the response we get to this program,” said Ann Luzzatto, a CBS spokeswoman.
In a statement, CBS President Thomas L. Wyman said the company “is in the process of examining ways in which we can streamline our operations to ensure our ability to be competitive in all our businesses.”
CBS declined to estimate how much the early retirements might save the company, which declared in unveiling its stock buy-back last July that it hoped to cut operating costs by $20 million a year by 1987. One analyst, J. Kendrick Noble of the Paine Webber brokerage, estimated that the move could save the company “far more” than the $20-million-a-year target.
The program will apply to employees who are over 55 years old and have at least 10 years’ credit toward their pensions. Such employees will be given a credit of an additional five years toward their retirement benefits. Employees who wish to take advantage of the program will have until Nov. 1 to decide.
Rumors of pending layoffs at CBS have circulated widely since the July 3 buy-back announcement. Broadcast trade publications have reported that the company was about to cut its 1,400-employee news division by about 100.
But CBS officials insisted that plans to reduce staffing at the news division, as well as elsewhere in the company, are not complete.
Edward Atorino, analyst with the Smith Barney, Harris Upham & Co. brokerage, said the program is a “humane alternative” to a large layoff but carries the risk that “the wrong people will take them up.” He said CBS’ cost-cutting program was driven not only by the need to cut debt created by the stock buy-back but also by the prospect of slower growth in broadcast revenue.
Because of a slowing in the economy and slippage in the network’s ratings, broadcast revenue growth is expected to decline from its historical growth rate of more than 10% to several percentage points below that, he said.
Sweeteners More Popular
“And yet they’re locked into commitments for programming that are expensive and that they can’t get out of,” he added.
Analysts said early retirement sweeteners have become more popular as a way to cut costs. They have recently been used by Du Pont and American Telephone & Telegraph Co., among others.
In announcing the stock buy-back plan last July 3, CBS also said it expected to raise $300 million through the sale of assets that have been “under-performers” or did not generally fit with the company’s strategic plans.
The sales effort is already under way. CBS last month sent out prospectuses offering for sale three of its publishing units: the CBS general book division, which publishes trade books; its Praeger textbook unit, and Winston-Seabury, a publisher of religious and educational books.
Ten days ago, CBS said it had sold a small cable-television network--the 19,000-subscriber Black Hawk Communications--to Sammons Communications of Dallas for an undisclosed amount.
News of the retirement offer met with investor approval. CBS common stock closed up $2.25 to $116 a share Tuesday.