Five months into his stint as CEO of Turner Broadcasting System, John Martin is focusing on maximizing performance and trimming fat. In a company memo sent out today (read it below), Martin outlines a global initiative called Turner 2020. It will feature a systematic assessment of every part of the company, focusing on “reducing spending and maximizing growth and profitability,” while prioritizing “programming, monetization and innovation investment,” Martin wrote. “We’re increasing investments in programming and content to keep our audiences engaged and bring new viewers to our brands. We’ll also spend on marketing, branding and promotion to break through the clutter.” Martin’s boss, Time Warner CEO Jeff Bewkes, told investors last week that he has budgeted $4B for original programming at Turner, with a goal to refresh the lineups more regularly. However, the “shifting (of) resources” … “may mean staff changes,” Martin said. “In fact, I’ll be surprised if it doesn’t.”
Turner already has a major staffing change in the works, with Turner Entertainment Networks president Steve Koonin recently exiting the company. Outgoing Fox Entertainment chairman Kevin Reilly has been rumored as a potential replacement. Martin’s memo, in which he acknowledged that “we have challenges at some of our networks; in particular, some of our largest, most profitable and highest-profile networks have experienced ratings headwinds,” came out on the day the Friday ratings for Turner’s CNN network came out, marking the net’s lowest rating at 10 PM in 14 years. A month ago, Bewkes singled out TNT and TruTV as networks whose ratings performance was not satisfying. Back then and last week, he was optimistic about TNT’s new focus on edgier, serialized dramas and broader shows in the hope that they will win over younger viewers. He also added that he’s optimistic about recent and upcoming changes in CNN’s schedule.
If history is any indicator, companywide initiatives with catchy names that focus on “maximizing growth and profitability” come with a human toll. NBCUniversal’s NBCU 2.0 campaign in 2006 led to $750 million in slashed expenses and 700 jobs cut, about 5% of its workforce. Here is Martin’s full memo:
June 2, 2014
At the beginning of this year, I wrote to you about Turner’s four main goals for 2014 and beyond: (1) investing in programming and brands to differentiate our content; (2) using technology in innovative ways to deliver more value to, and deepen engagement with, consumers and advertisers; (3) improving our competitive position internationally with smart investments and increased profitability; and (4) collaborating across Turner to improve efficiency, productivity and the way we set priorities in allocating our financial and human resources. These goals are all related. In particular, the better we do on the last goal, the more resources we can free up to devote to the first three key goals of programming, innovation, and international expansion and the more confidence we can have that we’re investing in those three areas wisely.
In April, I sent a message to you highlighting some of the great progress we’re making, particularly in programming with the success of March Madness, CNN’s extraordinary coverage of a must-see news cycle and our preparations for the Upfront selling season. Since then, we’ve continued to achieve against our priorities for the year.
Today, I want to talk with you about some of the near-term challenges we’re facing; what we need to do to improve Turner’s long-term future in an evolving TV landscape; and an initiative that we’ll be launching in the next few weeks to help us move forward.
In the near term, we have challenges at some of our networks. In particular, some of our largest, most profitable and highest-profile networks have experienced ratings headwinds. This is not news to the people who work at these businesses, or for that matter to anyone who follows the business of television. For all of their programming strengths, their loyal fans and followers, their awards and recognition, their financial over-performance and everyone’s continued great work on their behalf, their ratings performance has not kept pace with the competition or, just as important, with our own high expectations.
We have plans in place for each and all of these brands. We’re increasing investments in programming and content to keep our audiences engaged and bring new viewers to our brands. We’ll also spend on marketing, branding and promotion to break through the clutter and make some positive noise. You saw this strategy at work at our entertainment and news Upfront presentations, where we acknowledged and embraced the need for change, aggressively repositioned our brands for growth and introduced comprehensive new programming plans across the portfolio. We looked confident, bold and ready to address our challenges. We are ramping up collaboration as we develop plans to elevate our global position in the Kids business. And we’ll continue to invest in technology to create compelling, useable, scalable consumer experiences. It may take some time for these efforts to take full effect, but I’m confident we can get there with smart planning and great execution. I’m proud of your creativity, energy and openness and certain that together we’ll make Turner even stronger.
In the longer term, the TV landscape is changing in ways that mean we will need to invest even more (and more successfully) in compelling original programming; in differentiating our network and programming brands in an increasingly on-demand world; in finding new and innovative ways to connect with consumers; in building scale to reach broader international audiences; and in taking advantage of technology to deliver more value for consumers and advertisers, not only through TV Everywhere but also through selective and strategic investments outside the traditional TV environment, such as BleacherReport.com.
All of this brings me back to the fourth strategic goal listed at the outset of this memo: collaborating across Turner to improve efficiency, productivity and resource allocation. In simple terms, we need to shift resources in some instances to fund and fuel our highest priorities. We need to act now to free up resources in the short-term to improve ratings at some of our networks, and to secure the long-term success of Turner.
Accordingly, we are rolling out a global initiative to maximize performance across the entire company: Turner 2020. As part of this process, we will assess every part of the company to ensure it is optimized against our strategic priorities, reducing spending and maximizing growth and profitability. To commit to staying top of market, we need to prioritize programming, monetization and innovation investment while reducing spending in less-impactful areas. I’ve asked John Kampfe and Kelly Regal to lead this effort day-to-day, but ultimately this initiative reports directly into me. The Turner Executive Committee members will be highly involved, will help lead the effort and will be responsible for its successful execution.
We’ll provide more details about Turner 2020 in the coming days, but I expect that it will be transformative in some areas of our company. We’ve been shifting resources already and I would ask that you think carefully about how and where to get the greatest return on the assets you control. This may mean staff changes. In fact, I’ll be surprised if it doesn’t. I want to see Turner vibrant and market-leading in programming, branding, innovation and profitability in 2020 (the 50th-anniversary year of our company’s founding). We need to work hard now to ensure that we reach that goal.
Turner has long been a company that has embraced—indeed, led—change in the TV industry, from pioneering the basic cable industry to launching the first 24-hours news network, spearheading TV Everywhere and creating innovative multi-platform advertising solutions. I am very confident that we’re up to this next challenge and will emerge even stronger.
Thanks for all you’re doing at Turner today, and for what we will do to prepare Turner for tomorrow.