The Worst of Time Warner

All eyes were on Time Warner this morning as the company released its third-quarter earnings. Yesterday, word broke via Stephanie Clifford on the New York Times' Media Decoder blog that the promised layoffs coming to Time Warner's publishing unit, Time Inc., had begun with cuts at Sports Illustrated.

As for today's earnings report, Time Warner reported revenue of $7.1 billion, a 6 percent decline from the same period last year. (The company's profits fell off 38 percent from last year.)

For the publishing unit, where at least 540 will lose their jobs before Thanksgiving, according to the New York Post's Keith Kelly, that meant an 18 percent decrease. The decline was blamed on the bad advertising market, as well as decreases in subscriptions and newsstand sales.

In the release, Time Warner chairman and CEO Jeffrey L. Bewkes said, "We still expect to spin off AOL by the end of the year, and we’re making great progress on our other longer-term strategic priorities."

Some are wondering what else might be spun off—specifically, the publishing unit, which has been rumored to be in play for years. A spinoff was pooh-poohed by Bewkes as recently as early October at The Atlantic's First Draft of History conference, but some still see a magazine sell-off as an option for the larger company.

"Will Time Warner scrap Time Inc.?" asked MarketWatch's Jon Friedman this morning. Friedman went on to say, "Time Warner really has no practical use for a magazine operation, when you look at the conglomerate with a cold, rational eye."

What does that say, then, for Time Warner's AOL unit—part of the Internet, more or less—which did even worse with a 23 percent revenue decline? As Silicon Alley Insider's Jay Yarow's caveman-like headline put it: Time Warner Okay, AOL Awful. (Well, soon enough AOL won't be Time Warner's problem anymore, so there.)

Deftly reading the CEO's mind, Friedman writes, "Likely, Bewkes' head tells him the time is here to find a way to unload the magazine division. Magazines, after all, are widely believed to be a dying form of communications, imperiled by the speed and ever-improving content of the Internet. But Bewkes would probably not want to go down in history as the CEO Who Betrayed Time Inc. and turned his back on the company's glorious past."

In a memo sent out to the flagship magazine's staff (here reproduced by Gawker's Hamilton Nolan), editor Rick Stengel expressed his hope that "up to 12" editorial staffers would themselves choose to be a part of the company's "glorious past" by voluntarily accepting a buyout.

"The call for volunteers will expire on the close of business November 18," the memo declared flatly. Two weeks to decide your future after a career of loyal service to a company? Thanks!

If Time Inc. staffers of a certain seniority have to choose between being among the dozen who voluntarily walk out of the building, head—and mail-room boxes—held high versus being one of the 500-plus escorted out by security, it doesn't seem like much of a choice at all, does it?

Update, 2:43 p.m.: Since posting this, more (bad) news has come out Time, Inc., including the fact that Fortune Small Business has been shuttered. The magazine, a custom publication produced with American Express, had 11 employees who have been laid-off. The New York Times Media Decoder blog has also reported that Time Inc. filed a letter with the New York State Department of Labor declaring its intention to eliminate 280 jobs between November 2 and January 31, 2010. In a memo to staff (posted by Gawker) Bewkes wrote (with just a little understatement), "These are challenging but exciting times for Time Warner."

He continued, "As a content-focused company, I believe that we'll be better able than ever to take full advantage of the opportunities offered by new technologies. At our core, of course, we're about great content."