It should come as no surprise that the Meredith Corporation, which purchased Time, Inc. earlier this year for $2.8 billion, has decided to cut costs and improve operational efficiencies by laying off approximately 600 employees in Tampa, Florida and outsourcing its publication fulfillment and customer service operations to Meredith’s current fulfillment vendor, Hearst-owned CDS Global based in Iowa. The transition will occur gradually over the next year as monthly titles are transitioned first, followed by Time’s weekly titles, and with full facility closure slated for the end of 2018.
The Tampa facility processes subscription renewals and direct mail for all Time titles, including Time, People, InStyle and Sports Illustrated. Excess capacity is sold to non-affiliated publications such as Rolling Stone, National Geographic, and Playboy. Prior to its acquisition by Meredith, the management of Time had considering selling the business to the highest bidder.
According to Art Slusark. Meredith spokesperson, “After careful evaluation we made the difficult decision to move the acquired Time Inc. titles to CDS Global, Meredith's current fulfillment provider. Our company is better served not being in the fulfillment business, and we will see significant savings as a result of this change.” “Obviously, it’s a volume move. By moving the business over there, we’re getting a better rate. It’s a win-win for Meredith and for Iowa and for CDS. We experience a cost savings, and CDS gets some more jobs, which benefits the state of Iowa.”
President and Chief Operating Officer Tom Harty told investors in Meredith’s 2018-Quarter 2 earnings call, that “we are launching a thorough combined media asset review to determine where the most opportunity exists to grow revenues and improve profitability. We will focus on creating stronger and more profitable properties with the goal to be the number one or number two brand in this space, because just like our television business, top brands garner the lion’s share of the ad revenues. Additionally, we would explore divesting assets that are not core to our business and might perform better with a different owner.
As [Chief Financial Officer] Joe [Ceryanec] mentioned, we’ve been pleasantly surprised with recent transaction prices in the media space, and inbound interest for certain properties has been strong. Finally, we are very focused on fully realizing the high end of the $400 million to $500 million range of annual cost savings within the first two full years of operation. Given our previous initiatives to acquire Time Inc., we are very familiar with the available synergy opportunities. We are laser-focused on this goal and we will bring to bear the cost discipline we’ve come to expect from Meredith.”
One wonders how many of these employees started getting their affairs in order and seeking employment prior to the move when the market would not be flooded with similarly skilled workers?