AOL Time Warner lays off 2,400 employees

The media giant confirms the layoffs, which extend across the newly merged company's many divisions and bring total cuts to 2,400.

Jim Hu Staff Writer, CNET News.com
Jim Hu
covers home broadband services and the Net's portal giants.
Jim Hu
3 min read
AOL Time Warner has laid off about 2,000 employees, the company confirmed Wednesday, bringing total cuts at the newly merged company to 2,400.

Tuesday's layoffs account for 3 percent of the company?s total premerger work force of 85,000, including 400 cuts announced last week at the company?s CNN subsidiary.

As reported Tuesday night by CNET News.com, the job cuts are widespread, reaching many of the media titan's fiefdoms. The layoffs were focused mostly in areas of high overlap such as the online efforts of AOL Time Warner's many divisions. The cuts were meant to strip away redundancies and streamline operations, the company said.

"In no area are we cutting into the muscle of the company. We need that muscle to grow and to compete," said Scott Miller, an AOL Time Warner spokesman.

The greatest number of job cuts came from the company's AOL division, where 725 jobs were eliminated. Miller declined to specify which areas were affected within that division.

AOL Time Warner has been reviewing its business units and planning layoffs to reach its goal of increasing earnings by $1 billion to $11 billion, excluding certain costs, in the next year.

Time Inc.'s publishing unit cut 400 positions by reducing its direct marketing operations in Alexandria, Va., and by relocating of a fulfillment office in Birmingham, Ala., to an existing customer service facility in Tampa, Fla.

Movie and TV studio Warner Bros. will cut 100 jobs through staff cuts at Entertaindom. As previously reported, Entertaindom will be absorbed into Warner Bros. Online.

Warner Music Group, the company's record label, will eventually cut 600 jobs worldwide, mainly through attrition and retirement. Most of the cuts will come from music manufacturing and distribution.

New Line Cinema will eliminate 100 positions, mainly in its creative departments. The unit has produced some notable failures, racking up losses on at least one recent film, "Little Nicky."

"Everyone was shell-shocked," said one employee at New Line Cinema. "The ones who survived felt guilty, and the ones that got laid off felt like hell."

The company plans to meet with analysts Jan. 31 to discuss its outlook for the coming year. Although the star for Internet stocks and businesses has fallen dramatically, AOL Time Warner executives have so far stuck by their earnings growth estimates.

Corporate offices at AOL Time Warner will also reduce staff by 100 employees. Specifics about which departments were not disclosed.

In addition, the company plans to either sell or shut down its Warner Bros. stores, which sell merchandise related to the studio's cartoon characters, TV shows and films. Should the sale or closure go through, 3,800 jobs will be transferred to the buyer or be eliminated.

AOL Time Warner employees affected by the cuts will receive severance packages, which will vary depending on the division.

AOL Time
Warner package For the remaining employees, the company will offer stock options as an incentive. Division heads and managers in the past were given cash rewards based on performance. Now, the heads will receive only stock options.

The cuts will not affect HBO, Time Warner Cable, the WB Network and Turner Broadcasting, aside from the 400 previously announced layoffs at CNN.

News.com's Paul Festa contributed to this report.