To him, the company’s corporate headquarters in the gleaming towers of the Time Warner Center is an “indulgence,” a giant reminder of past mistakes made by one of the world’s largest media companies. “There was a burgeoning overhead reaching $500 million a year, including this edifice you’re sitting in,” Mr. Bewkes said.
Time Warner, one of New York City’s largest commercial tenants, is now studying how to consolidate most of its four million square feet of office space. That probably means finding a new headquarters in a less expensive part of Manhattan and vacating the Time Warner Center, the Time Life building at Rockefeller Center and many of its remaining 13 New York-area buildings. The company estimated that cutting back on its real estate footprint could save as much as $150 million a year.
The real estate moves are part of a larger effort to slim down a company that many investors say they believe became bloated during the acquisition frenzy of the last decade, when media companies raced to acquire expensive Internet companies. The failure of the 2000 AOL-Time Warner merger, widely considered one of the worst corporate marriages of all time, and other debacles like News Corporation’s $545 million loss on MySpace, have motivated companies to rebalance.
“For every action there’s an equal or opposite reaction,” said Benjamin Swinburne, an analyst with Morgan Stanley. “The conglomerate-building of the 2000s, which peaked with AOL-Time Warner, well, this is the reaction.”
Barry M. Meyer, chairman and chief executive of Warner Brothers, said the trend toward major corporate expansion pushed companies “to tack on new businesses that were kind of adjacent.” That strategy, he said, “defused efforts rather than focusing them.”
These lessons have taken hold under Mr. Bewkes at Time Warner, which owns Time Inc.; HBO; Turner Broadcasting stations like CNN, TNT and TBS; and the Warner Brothers studio. The company will also consolidate shared services like human resources and information technology. Some departments will be relocated to other parts of the New York area and states like Florida that offer tax incentives.
The cost-reduction measures are expected to save $500 million annually starting in the next several years, and are meant to help Time Warner afford a bigger investment in content — the television shows, movies, sports and news that drive revenue. Spending on content has jumped 7 percent annually since 2008 as Time Warner has shed costs in other areas, the company said.
“The idea is to take money being spent on insignificant things out and put it into significant things which are programming, journalism and digital translations of our products,” Mr. Bewkes said.
On Wednesday, Time Warner will release its third-quarter profits. In the second quarter, which ended in August, the company reported its highest growth rate since 2007 and revised earnings up slightly for the year.
The slimming down at big media companies is partly a matter of survival. In recent years, fast-growing Internet companies like Groupon, Facebook and Netflix, recent bumps notwithstanding, have made old media companies seem stodgy and oversize, and with sagging stock prices to prove it. Costly mistakes have compounded the problem and accelerated the desire to shed assets that are not core to their businesses.
Mr. Bewkes took over Time Warner in 2008 and the next year spun off Time Warner Cable. Also in 2009, he completed the spinoff of AOL and vowed to make Time Warner a purely content-driven company. He dissolved NewLine, the 40-year-old movie production company, into Warner Brothers, which resulted in roughly 600 layoffs. In 2003, as chairman of Time Warner’s entertainment and networks group, Mr. Bewkes brokered the $2.6 billion sale of the Warner Music Group.
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