AOLTW CUTS MAY HIT MUSIC GROUP

In the wake of the $106 billion AOL-Time Warner merger, approved by U.S. regulatory concerns last week (hitsdailydouble.com, 1/11), comes word that AOL is calling for notable cost-cutting initiatives that will affect nearly every division within the media giant.

While those in charge have yet to make public directives on how the divisions should slice expenditures, belt-tightening is already being felt at TW's film, TV and online operations. High-profile restructuring at TW-owned companies like New Line Cinema, CNN and Entertaindom, and the slashing of existing budgets at other units in the mix, have already begun.

With that said, wary music industry insiders are anticipating the coming mandate to trim overhead at TW's Warner Music Group, which encompasses record labels Atlantic, Elektra and Warner Bros., as well as pubbery Warner/Chappell Music.

Sources said that WMG staffers are bracing for across-the-board cost-cutting measures, which may take place in the not-too-distant future. The music group's worldwide Internet play, an obvious target, already took a hit from AOL honchos last week, when the parent company made deep monetary cuts in WMG's planned new-media budget, according to those who claim to be in the know. Additional changes—both inside and outside WMG's online operations—including a possible head-count reduction, are reportedly on tap, sources said. TW's other online ventures, such as Warner Bros. Online, are likely targets for further consolidation as well. The other day, the plug on Entertaindom, one of the company's online entertainment destinations, was reportedly pulled (hitsdailydouble.com, 1/18).

Sources said that some of WMG's high-level top-salaried record veterans, many of whom have worked at the company for decades, will be offered retirement packages before a proper restructuring is proposed and implemented.

However, sources indicate, division heads are trying to avoid massive layoffs by satisfying money-saving requests through other methods.

In the case of the Warner film and TV studio, AOL is asking for more than a $100 million adjustment, sources said. At TV property CNN, the elimination of 400 employees, about 10% of its work force, has already been ordered. At film company New Line, Production President/CEO Michael DeLuca resigned this week (rumor mill, 1/17) amid reports that a 20% staff reduction will soon follow, sources said. Broadcast network the WB expects a $5-10 million slashing, according to published reports.

Cuts at TW's other cable properties and publishing divisions remain unclear but are expected.