Primedia Announces Hiring and Salary Freeze
Posted on October 26, 2001
Primedia, Inc. has announced plans to continue cost reductions, including staff reductions, a hiring and salary freeze and a reduction in travel expenses. Primedia's stock price has been suffering and recently dipped below the $2 per share range. The media and publishing company reported a large third quarter loss and has been criticized for its large debt and purchases of Internet companies. However, Primedia reported that it will have sufficient financial resources to meet its cash needs.
Some cost reduction actions include the previously reported reengineering of the Primedia Business Magazines and Media Group resulting in a 20% reduction in positions. Recently, About.com has reduced employee count by nearly 60% and terminated many of its Guide Sites. Headcount has been reduced in all other operations, including corporate, by approximately 8%. Additionally, all salaries and hiring are frozen and discretionary expenses including travel are being reduced by 50%.
Tom Rogers, Chairman and CEO of Primedia, stated, ``Primedia is the number one targeted media company. Our core traditional business currently generates more than $300 million of EBITDA annually, our new media businesses will be cash breakeven soon and we continue to see growth across revenue streams representing two-thirds of our revenues, despite the severe advertising recession. We have sufficient financial resources and we see no issues in our ability to continue to meet all of our obligations and remain in compliance with our credit agreements. We have multiple interested buyers for various properties, are moving ahead with the asset sale process and will announce transactions over the next few months. The asset sales will provide even more liquidity.''
Primedia also reported that traditional and new media businesses that cannot be turned profitable in the very near term through cost takeout are being shut down or sold to eliminate further cash drain. The company continues to wind down unprofitable properties by selling, shutting down or eliminating them through integration. Most recently, Primedia terminated its joint venture with Brill Media Holdings.