RETIREMENT PLAN OFFERED TO AOLTW EMPLOYEES

Word of AOL Time Warner CEO Gerald Levin's intent to generate $1 billion in cost savings through budget cuts and the elimination of personnel spread like wildfire Monday (1/22), leaving many in the company's music operations and other divisions worried about their futures.

Along those lines, hitsdailydouble.com has learned that the company plans to send out letters as early as this week to specific employees detailing an early retirement proposal. The packages are corporate-wide and not music industry specific.

The retirement plan is targeted at non-contractual employees over 50 years old with at least 10 years of service, sources said. The company is offering four weeks compensation for every year served, a commemorative "AOL Merged With Time Warner And All I Got Was Early Retirement And This Lousy T-Shirt" T-shirt and a honey-baked ham.

Those receiving notification of the offer will have six weeks to decide whether to accept the deal, sources said.

Wary music industry insiders are also anticipating the coming mandate to trim overhead at WMG, which encompasses record labels Atlantic, Elektra and Warner Bros., as well as pubbery Warner/Chappell Music (hitsdailydouble.com, 1/19), as many of the company's music employees have 20-plus year tenure.

Within AOL Time Warner's music operations, sources said Warner Bros. Records might be the hardest hit, as the label is chock full of long-time employees many of whom have been with the company for nearly three decades. Elektra and Atlantic do not employ as many executives that fit the requirements for the early retirement plan.

Sources said that the early retirement package, reportedly comparable to the one offered by Universal after its purchase of PolyGram, is an attempt to cut down on the head-count reduction expected to follow in the near future.

To that end, sources said WMG Chairman/CEO Roger Ames may be forced to make structural changes at the labels by merging various departments within.

Meanwhile, insiders point to some music executives' contracts that are conveniently running out as an attempt to make the lucrative package available to some longtime players.

Word that AOL Time Warner was calling for notable cost-cutting initiatives followed shortly after the $106 billion merger of AOL and Time Warner was approved by U.S. regulatory concerns (hitsdailydouble.com, 1/11).

Sources tell hitsdailydouble.com that some layoffs are expected to begin as early as Monday (1/23).

Those in charge have yet to make public directives on how the divisions should slice expenditures, even though 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.

The music group's worldwide Internet play, an obvious target, already took a hit from AOL honchos, 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.

In the case of the Warner's 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 (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 the music publishing division and music distribution remain unclear but are expected.

AOL Time Warner representatives declined to comment on any cost-cutting maneuvers, but company executives are scheduled to outline details of cost savings and efficiency measures when they meet with Wall Street analysts Jan. 31—the same day the companies will release fourth-quarter earnings.

Stay tuned, there is more to come.