Last week, the company began formally to roll out its so-called 50-15 buyout, being offered to employees who are 50 or older and have worked for the company for at least 15 years. If too few people take the buyout, observers both inside and outside the company fear layoffs will be inevitable. Indeed, job eliminations have already hit the Fortune group, which had a supercharged year in 2000. Recently, Time began the process of eliminating 16 editorial positions and Sports Illustrated six. Magazine editors don't think much fat remains after the Logan years, but that's not how Wall Street sees it. In April, First Union Securities analyst Scott Davis wrote that AOL Time Warner "has an expense base of $30 billion, giving them a lot of room to tighten costs." Translation: Sack whoever you need to sack, but you will justify this merger on the bottom line.
Though they've just reported first-quarter earnings of $113 million - a 20 percent increase over the same period a year earlier - executives at Time are already feeling the post-merger budgetary pinch. "We hit our first-quarter numbers; we frankly had to do a lot of smoke and mirrors to do that," says one. "If the economy stays bad, many of the magazines around here couldn't hit the numbers AOL gave us at the beginning of this year." AOL might already have figured this out. Though the company denies it will have trouble making its targets, its recent $1.95 rate hike for Internet subscribers adds an easy $200 million to this year's bottom line.
The history of Time Inc. - the very fact that it has a history - separates it from AOL, a company founded on the principle of throwing out the old, not guarding it. Just how difficult it will be to truly integrate the two companies is providing endless fodder for speculation, gossip and anxiety. And nowhere is there more potential for a cultural collision than in the hallways of the magazines. It may not be the largest part of the new corporate empire (accounting for just 12 percent of AOL Time Warner revenues last year and 9 percent of earnings), but it is the most visible, publishing 64 titles, including People, InStyle, Money and Entertainment Weekly. Some magazine staffers insist that they see no signs of AOL transforming their workplace - and indeed, many have barely encountered the new guys from Dulles, Va.
But the cultural differences are dramatic. Seventy-eight-year-old Time Inc., in some ways, is actually more like an Internet startup than 16-year-old AOL. Highly decentralized, it encourages its executives to act like entrepreneurs and empowers even those at the junior level to make decisions. AOL, on the other hand, is run by a "small think tank at the top," says one Time Inc. executive. An editor at Time Inc. observes, "AOL people always say 'my boss.' I've never heard anyone at Time Inc. say 'my boss.'" AOL's attitude toward its employees, according to an ex-executive, is: "If you want a friend, get a dog." The two companies also have different traditions when it comes to spending. One AOL executive recently boasted, "AOL runs lean. If people can't get with that, then they are children."
The Time Inc. culture goes far beyond mere generosity to employees. More central to the ethos is the belief among staffers that they are at the top of their field. As one longtime writer puts it, "There's an unwritten pride in people here being sort of Renaissance men or women." AOL is perceived as producing downmarket content with more of a marketing mission than an editorial one. The AOL homepage can seem like all Britney, all the time, while at Time, even Teen People has a claim on editorial classiness: It won this year's National Magazine Award for large-circulation magazines.
AOL comes rolling into a business that is steeped not only in its own cultural traditions, but one that has had an unmistakable influence on the culture at large. In 1923, 35 years before Steve Case was born, Time was founded by two friends from Yale University, Henry Luce and Briton Hadden. In an era when journalism was a blue-collar profession. Luce and Hadden conceived Time as an uplifting, patrician take on the news. Time's editors turned news into narrative and subjects into characters, identified by mock-Homeric epithets like "the duck-hunting dentist" (Minnesota Sen. Hendrik Shipstead) and "the long-whiskered admiral" (German naval commander Alfred von Tirpitz). Timestyle became the basis for the modern middlebrow magazine idiom. Eventually, Time became an integral part of American culture; in the '50s and '60s, its editors met regularly with presidents and wielded considerable influence in matters of foreign and domestic policy.
