The bad news is that approximately 600 of Turner Broadcasting’s 55 and older employees or those who have been working for the media conglomerate for over 10 years are eligible for a buyout. The good news is that, according to Reuters, Turner doesn’t have any immediate plans to get rid of those employees who refuse the package.
The reported buyouts will include a nine- week salary package with an additional four weeks of pay for each year of service. Depending on how you look at the good or bad news, no one can argue that it’s a much better deal than other big businesses have offered in the past. However, the ongoing effort for the wor;d’s CEOs to “cut costs” remains the same.
“Given the current focus on reducing costs and prioritizing investments to maximize company performance, Turner will also undertake additional reductions in staffing,” CNNMoney reported from an internal memo.
The announcement came Tuesday—after weeks of speculation about possible layoffs on the horizon at Turner— in the form of a letter to employees. Since then, rumors have run rampant about the real reason the company has decided to offer the confidential package to its employees.
The Big Move
According to Channel 2 Action News and the Atlanta Journal-Constitution, one of the most widely spread rumors was that CNN— Turner Broadcasting’s cash cow and global news provider— was moving its headquarters and its over 13,000 employees out of Atlanta.
This bit of gossip seemed more likely since none of CNN’s anchors broadcast from the location anymore. In addition, there have been some layoffs at the network during the last couple of years. In 2013, over a dozen of employees were laid off, including big network producers such as 32-year veteran Karen Bonsignore and members of her team, Jennifer Wolfe, Doug Hyde, Denise Quan, and KJ Matthews. This particular round of layoffs also occurred in Los Angeles and New York and were yet another effort to “reduce costs”. And earlier this year, CNN let of 16 employees and moved 50 more to another location in May.
But despite the changes, this rumor was quickly dispelled by reporters after contacting the state Department of Economic Development. According to the agency, Turner had not submitted the required 60-day notice or any of the documents to terminate such a massive number of employees,
“The only thing we’ve heard are the rumors in the media and that’s all we’ve heard,” Chris Carr, economic development commissioner, told Channel 2 Action News and the Atlanta Journal-Constitution.
Major Deals Gone Wrong
The unfortunate turn of events for Turner’s employees may have come from recent negotiations that didn’t turn out so well for the company. According to USA TODAY, Time Warner’s firm denied an $80 billion deal by Rupert Murdoch’s 21st Century Fox to buy the company’s shares. After refusing the offer, Time Warner CEO Jeff Bewkes said it “would be better off as a standalone”.
Last month, Murdoch had made his play for the company in order to increase Fox’s revenue. But Time Warner’s unwillingness to play ball with him and Fox’s sinking stock price were the reasons why the company decided to bailout.
“This significant return of capital underscores the company’s ongoing commitment to disciplined capital allocation and returning value to shareholders in a meaningful way,” Murdoch said in a statement after withdrawing the bid.
Since then, according to USA TODAY, shares of Time Warner have increased to 20 percent around rumors that Murdoch’s planned to start a bidding war for Turner Broadcasting. This could have been a major deal considering the company runs the Warner Bros. studios, and a host of entertainment and cable networks such as HBO, TNT, TBS, and CNN. And the win for Murdoch would have been “the largest media merger since the disastrous AOL purchase of Time Warner for $162 billion in 2000” says USA TODAY.
A Strategic Move
Forbes reported that the buyouts are a part of Turner Broadcasting’s strategy to combat potential costs deriving from the upcoming National Basketball Association’s media rights agreements. Worth somewhere around the $900 million mark annually and representing almost 20 percent of growth over prior deals, the upcoming series of talks “could lead to a doubling of that annual fee across the board,” says Forbes.
“It has Turner Broadcasting, which currently pays slightly less than Walt Disney DIS+0.29% Co.-owned ESPN in rights fees to the NBA, already preparing for the future by planning layoffs,” says Forbes.
The rumor is that Turner Broadcasting has planned to lay off its workers in order to reserve a sufficient amount of funds for any big surprises that may come from the rights agreement, which will expire in 2016. The expected increases in the costs associated with fees and new shows also are increasingly supporting the buyout rumors.
All About the Benjamins
The fact of the matter is that the buyouts, which are reported to start sometime in October and November, are already on the table. And there also are rumors that more layoffs are coming down the pipe. According to a transcript that The Atlanta Journal Constitution managed to snag, CNN worldwide President Jeff Zucker sent the following message to its employees:
“We are going to do less and have to do it with less,” Zucker said. “As a result, that means there will be changes. No final decisions have been made.”
While the rumors fell short of providing employee’s reactions, there’s no doubt that Turner Broadcasting’s honesty may have soften the blow.