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"[The cuts are] 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. This is all about growth—it's the reason for the merger starting from day one."
—AOLTW Co-COO Bob Pittman
WMG TOLD TO CUT 600 STAFFERS
"Creative Side" Allegedly Left Untouched During Bloodbath, If That’s Any Consolation
It was terrible Tuesday at AOL Time Warner as the company initiated its $1 billion cost-cutting plan, which included the elimination of approximately 2,400 jobs and the call for at least 600 firings at the media giant's Warner Music Group.

AOL Time Warner plans to announce the layoffs today (1/24), along with news that it's revamping its compensation structure and awarding stock options to many employees in a one-time grant. The layoffs were announced internally Tuesday (1/23), sources said.

WMG, one of the divisions marked for restructuring by the group's merged management due to poor performance, has been told to cut 600 jobs, sources said. The firings are to come through attrition and early retirement packages first, followed later by head-count reductions. Early retirement packages are being offered to non-contractual employees 50 years of age or older with at least 10 years experience at the company. Recipients of the offer must decide whether to take the lucrative deal—reportedly four weeks compensation for each year served—within 45 days, as we first reported (hitsdailydouble.com, 1/23). The 600 firings, slated to be spread out over the next six months, represent about 5% of the music group's 13,000-member work force, sources said.

Co-COO's Richard Parsons and Bob Pittman said Tuesday the 2,000-plus jobs targeted for elimination would come from nearly all of the company's units, including AOL's Internet organization, New Line Cinema, Time's magazine operation and WMG.

Regarding the music group, Parsons said the job losses would be in infrastructure areas, manufacturing and distribution. He emphasized that the company was "not touching the creative side of the house."

Pittman added, "[The cuts are] 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. This is all about growth—it's the reason for the merger starting from day one," he said.

With the exception of the planned WMG reshuffling, most staffers within the corporation singled out for elimination were handed pink slips yesterday and are expected to leave immediately.

Parsons and Pittman said Tuesday that almost all of AOL Time Warner's remaining employees would be given stock options in a one-time move meant to give workers a feeling of responsibility for the new company.

As news of the bloodbath circulated, talk in the music industry centered on the future of many prominent players in the WMG mix.

Sources say WMG Chairman/CEO Roger Ames will likely restructure operations after the retirement package period runs its course. Warner Brothers Records' much-loved Chairman/CEO Russ Thyret, a 30-year company veteran rumored to currently be working without a contract, is the highest profile music executive reportedly being asked to accept the company's early retirement plan, sources said. Word from inside the company, however, is that the loyal mainstay, viewed as a unifying force at the label, is not leaving just yet. But, when and if he does, others are expected to follow.

Ames has already hired Interscope chief Tom Whalley to lead the WB charge, although the seasoned industry vet is still under contract at the Universal Music Group, as we have repeatedly reported. Others rumored to be in play include Reprise Records President Howie Klein, sources said. Meanwhile, Senior VP Worldwide Corporate Communications Bob Merlis, a valued member of WB's team since 1971, is expected to announce that he is stepping down from his post in the near future and will accept the early retirement package.

Warners has never truly recovered from the departure of leader Mo Ostin and his second, Lenny Waronker, less than 10 years ago. Following their exit, a who's who of executives, including Bob Morgado, Michael Fuchs, Doug Morris, Danny Goldberg, Bob Daly and Terry Semel, and most recently Ames, have been charged with returning the company to its glory days as the industry's top music operation.

BLACKOUT TUESDAY: HOW THE MAJORS RESPONDED
(6/5a)
HARLESTON, HABTEMARIAM LAUNCH UMG TASK FORCE
(6/5a)
SONY MUSIC SETS UP $100M FUND
(6/5a)
10K OPENS FUND TO AID BLACK YOUTH
(6/5a)
BLACK MUSIC MONTH: THE REVOLUTION WILL NOT BE TELEVISED
(6/5a)
WHAT NEXT?
The biz ponders action after some reflection.
GRAMMY SPECULATION
100% guaranteed to be somewhat accurate, probably.
BLACK MUSIC MONTH
...continues.
TRUMP'S IN THE BUNKER
Just to inspect it, though.
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