MEDIA WATCH: AOL Time Warner claims cuts will move it forward

In recent weeks, Corporate America has been laying off tens of thousands of workers. AOL Time Warner, JC Penney, eToys, Lucent Technologies, Whirlpool and Eckerd Drugs are just a few of the companies that have been busy handing out pink slips.

In recent weeks, Corporate America has been laying off tens of thousands of workers. AOL Time Warner, JC Penney, eToys, Lucent Technologies, Whirlpool and Eckerd Drugs are just a few of the companies that have been busy handing out pink slips.

In recent weeks, Corporate America has been laying off tens of thousands of workers. AOL Time Warner, JC Penney, eToys, Lucent Technologies, Whirlpool and Eckerd Drugs are just a few of the companies that have been busy handing out pink slips.

It would be tempting for the public to look at these events and deduce that similar circumstances motivated the companies to show employees the door. However, media coverage of these job cuts was quite varied, ranging from enthusiasm to gloom.

For example, to support its assertion that 'not all layoffs are created equal,' TheStreet.com (January 24) interviewed Pat Dorsey of Morningstar.com, who pointed out that while 'one could mean the death throes of a company, another is a company getting back on track.'

CARMA focused its analysis on the coverage of AOL Time Warner's layoffs and found that both the company and third-party analysts positioned the cuts in the context of streamlining the newly combined company to make it more efficient.

In announcing the layoffs, AOL Time Warner co-COO Bob Pittman stated, 'It is really about getting the company ready to take the next step, which means it was two separate companies and we want to get the redundancy out. We are going to move at a pace that we think no other company of our size does. We are going to adopt 'quick, nimble, fast' as a corporate culture' (The New York Times, January 24). Ensuing media coverage focused on this rationale more than any other as the impetus for the job cuts.

At the same time, AOL Time Warner also appeared eager to stress that the cuts were not in reaction to the slowing economy or the poor performance of the company. Spokespeople told the media, 'In no area are we cutting into the muscle of the company. We need that muscle to grow and compete.

These changes will sharpen our focus, capture synergies for growth and strengthen the integration of our company' (Los Angeles Times, January 24).

The media noted that more than 2,000 layoffs announced by AOL Time Warner did not include the possibility that the 3,800 employees of Warner Bros retail stores might be dismissed if AOL Time Warner cannot find someone to buy the chain of stores.

AOL Time Warner's layoffs were interpreted to be a sign that the company was serious about meeting its stated goals of finding dollars 1 billion in synergies from the merger while increasing cash flow by 30% in 2001.

An analyst told CNNfn (January 24), 'The timing of the layoffs would certainly give the impression, ahead of (AOL Time Warner's) January 31 investor meeting, that they want to show that they can make their numbers.'

However, the media also remarked that the numbers that AOL Time Warner has set for itself are very ambitious, especially in light of the slowing economy and lower levels of ad sales.

With the layoffs, AOL Time Warner appears to be streamlining before it starts its new life as a single entity market share. For the most part, the response was supportive, with the move seen as a good first step.

Now comes the hard part - delivering on its ambitious financial goals for 2001.



Evaluation and analysis by CARMA International. Media Watch can be found at www.carma.com.



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