After rejecting a takeover bid, Time Warner Inc (NYSE:TWX) is ready to implement strict budget constraints. Under its recent budget cut announcement, HBO, Pay TV network of Time Warner, is likely to lay off up to 7% of its current staff.
Time Warner Inc (NYSE:TWX) rejected $85 per share takeover bid from Twenty-First Century Fox Inc (NASDAQ:FOXA) earlier. After rejecting the bid, the company is under pressure to perform and control its operating expenses. These job cuts are imminent part of the process and HBO is likely to force 7% job cuts on its current 2,400 employees. The job cuts are likely to take away 150 jobs.
Richard Pelpler, CEO of HBO, mentioned in the memo sent to the employees on October 15,
“We have a long history of tightly managing our overhead so that we’re able to maximize investment in the creation, distribution and marketing of content. We also shift resources when necessary toward areas with the greatest potential to drive revenue growth and to enhance our brand.”
Pelpler further added, “A hallmark of our long-sustained success has been the commitment to making very difficult decisions even during times of growth and optimism.”
These strict budget constraints are likely to affect other units of Time Warner including Turner Broadcasting and Warner Bros. Earlier this month, Turner Broadcasting announced layoffs of up to 1,475 positions, and Warner Bros proposed job cuts in September.
Time Warner Inc (NYSE:TWX)’s HBO announced new standalone online streaming service for subscribers with no access to cable television. The new channels would offer shows like “Game of Thrones” online and the service is likely to be available in mid 2015. The pay TV channel is targeting the 10 million families that use broadband services instead of cable TV subscription. This is a strong move from the company to compete against online digital content providers.
This article has been written by Prakash Pandey.