Layoffs expected as McKinsey helps publishers Time cut costs
According to reports from the US, American magazine group Time has hired strategic advisory McKinsey & Company as the conglomerate bids to cut over $100 million in costs this year.
Time, the American mass media company behind over 100 global magazine brands including Sports Illustrated, People, and its standard-bearing Time Magazine, has reportedly brought in advisors from professional services firm McKinsey & Company.
Time has faced increasing hardship since its divorce from Time Warner three years ago. The company was purchased by Warner Communications in 1989, in a merger that formed the Time Warner group, before regaining independence midway through 2014, with Warner jettisoning the magazine magnate to focus more on its core business. The process left Time loaded with around $1.3 billion in debt, following almost a decade of declining revenues, which had seen unit earnings fall from nearly $1 billion in 2006, to $370 million in 2014.
According to Thomson Reuters, the company’s printed advertising revenue, which makes up over two-thirds of the publishing giant’s total ad sales, tumbled a catastrophic 10.2% in the fourth quarter of 2016 meanwhile. Despite digital advertising revenue rising by around 63% in the meantime, Time’s total revenue subsequently fell to $867 million from $877 million, failing to meet their average analyst estimate of $872.7 million. As the group’s income continues to tumble then, it has since been revealed that the besieged magazine group have begun procedure to find over $100 million in cost cutting over the following year.
The falling revenues at the company had led to various offers for a buyout of the publisher, however Time CEO Rich Battista, rebuffed the efforts earlier in 2017, breaching the no-sale message in late April. Battista instead announced the company would be aggressive in cost controls, while focusing on an ongoing strategy would include an increased digital push as their traditional readership moves from print to web-traffic, alongside “portfolio rationalisation.” This prompted further speculation of the sale of Time assets, with layoffs a likely result of the oncoming auction.
Conjecture surrounding the expected fire-sale is meanwhile growing, with rumours that Time is already looking to offload four magazines, Coastal Living and Sunset – as a unit – as well as Health and Golf. Accompanying a projected sale of the group’s British wing, IPC, which runs 64 magazines meanwhile, inside sources suggested that Time’s London wing to have already absorbed about 100 of the 300 people who are being cut as part of the global downsizing project.
According to allegations emerging from sources in the group, the company plans to soon offer a voluntary round of redundancies to employees with 10 or more years’ experience. Depending on how many accept that option, Time would then revert to non-voluntary layoffs.
McKinsey, one of the world’s largest management consulting players, has recently made substantial efforts to boost its digital advisory capacity on a global basis, while the firm is already noted for its regular role in the restructuring of companies. With various sources stating publicly that Time is seeking to “reengineer” the way it does business, McKinsey’s alleged involvement perhaps comes as little surprise then, despite Time having not officially acknowledged the company’s hire.
