Two months after Time Inc. (TIME, Financial) ended potential merger negotiations, the media and entertainment company announced on June 13 it is undergoing a restructuring.
In an effort to focus on growth opportunities in digital media and video, the magazine publisher revealed in an internal memo it is eliminating 300 jobs around the world, accounting for 4% of its workforce.
Cuts will be made to various departments across the business in order to eliminate inefficiencies and streamline operations. Half of those who will be affected by the layoffs are based in the U.S. and 40% of those being cut are voluntarily leaving with buyout offers.
Time CEO Rich Battista said the layoffs are a difficult but necessary step for the company’s growth.
“I thank each and every one of them for their hard work, dedication and service," Battista said in the memo. "We are committed to supporting them during this transition with the utmost care, respect and professionalism."
Like other publishers, Time has been struggling with shrinking print circulation and advertisers shifting to digital platforms. The company replaced its CEO and explored a buyout earlier this year after activist hedge fund Jana Partners (Trades, Portfolio) established a stake in the company.
As a result, Meredith Corp. (MDP, Financial) offered to buy the company for $18 per share, but the deal failed as the bid fell short of the price expectations of $20 per share. The hedge fund exited the stock shortly after. The company also cut its dividend.
The restructuring is the company’s largest since it cut 500 employees in February 2014, around 6% of its total workforce.
Battista said the company is in rapid transformation as the industry is quickly changing.
"Transformations do take time and patience, but I am encouraged by the demonstrable progress we are making as we implement our strategy in key growth areas, such as video, native advertising and brand extensions, and as we see positive signs of stabilizing our print business, which remains an important part of our company," Battista said.
After the announcement, shares rose 0.5% to $13.97 on Tuesday. Time has a market cap of $1.4 billion; its shares were trading around $13.95 on Wednesday morning with a forward price-earnings (P/E) ratio of 10.9, a price-book (P/B) ratio of 0.9 and a price-sales (P/S) ratio of 0.5.
Among the gurus invested in Time, Leon Cooperman (Trades, Portfolio) has the largest holding with 4.4% of outstanding shares. Eight other gurus also own the stock.
Disclosure: I do not own any stocks mentioned in the article.
