Don’t call it HBO Go. But Time Warner’s directive to its divisions to cut head count, part of the media giant’s effort to improve profitability, hits the premium network operation this week. HBO will lay off about 7% of its 2,400 employees — primarily, but not exclusively, among those based in the U.S. Jobs are expected to be eliminated across the board, not by targeting specific units.
HBO chief Richard Plepler told staffers on October 15 — the day when Time Warner execs laid out their growth plans to Wall Street — to brace themselves. The 2015 budget “will unfortunately include the elimination of some positions,” he said in a memo. Acknowledging that “news of staff reductions is unsettling,” he assured employees that “we will manage this difficult process with the fairness and respect you would expect from our company.”
HBO’s cuts, first reported in Variety, follow similar ones at Time Warner’s other major units. Turner Broadcasting eliminated about 10% of its full time workforce, and Warner Bros said last month that it would make across-the-board reductions.
The belt-tightening follows Time Warner’s decision to reject Fox’s $80B takeover bid. Rupert Murdoch withdrew his $85 a share cash and stock offer in August. Time Warner’s stock price — which had stagnated in the months before the offer — fell as investors questioned whether the company could be as valuable on its own. Two weeks ago CEO Jeff Bewkes assured analysts, in a special meeting, that profits would double over the next several years. “Just don’t worry,” he told them. Shares closed yesterday at $79.27.
Plepler also caught the Street’s attention by promising to introduce an HBO streaming service that wouldn’t require subscribers to first have the expanded basic pay TV bundle. That’s one reason why this is “the most exciting inflection point, domestically and internationally, in the modern history of HBO,” Plepler said in his memo to staffers. “It’s fair to say that by any metric: subscriber growth, content deals, the ever-extending reach of our brand or industry buzz; we are at the top of our game – and as I also made clear, we are just getting started. All of this is possible for one simple reason, the talented people that make up this company.”