Media titan Time Warner announced today that it is spinning off its AOL advertising-and-dial-up unit into a seperate company.
AOL, which now employs 6,900 workers, is asking for 2,500 volunteers to accept buyouts and plans to resort to layoffs if it does not get enough people.
The voluntary offer is open to all employees from Dec. 4 though Dec. 11, AOL spokeswoman Tricia Primrose said. Time Warner, the New York media conglomerate, plans to spin AOL off as a separate company, AOL Inc., on Dec. 9.
AOL hopes to trim annual costs by about $300 million. The job cuts still need approval from the new AOL board.
Primrose would not say where the cuts would occur or what positions they would involve. The company is based in New York but also has major operations in Northern Virginia.
AOL's legacy dial-up Internet access business has been fading for many years, and the company already had shed thousands of jobs as it pared down that unit to focus more on producing content and serving advertising. But AOL had staggered in those efforts, even before advertising hit a slump because of the recession. It named one of Google Inc.'s advertising chiefs as chief executive this year to revive that business.
AOL's operations still make money, but that profit has been falling. Nonetheless, AOL does have a few bright spots, including the popular tech blog Engadget and the celebrity Web site TMZ.com, a joint venture with another Time Warner unit, Telepictures Productions, credited with being the first to report major developments including Michael Jackson's death.
Time Warner has said that AOL will take about $200 million in charges for severance and other costs related to the restructuring.
Shares in Time Warner fell 92 cents, or 2.8 percent, to $31.90 in morning trading Thursday.
Unemployment across the board is on the rise in New York. The jobless rate reached the double digits -- 10.3 percent -- in September of this year, compared with 6.0 percent at the same time last year, according to the latest numbers from the comptroller's office.
Part of the reason for such a high rate is that there are just fewer payroll jobs to go around. The city lost 57,000 payroll jobs in September, bringing the total job losses to 113,700 since August of last year.
“It is clear by all indicators that our City continues to reel from the effects of the recession,” Comptroller Bill Thompson said. "We are being outperformed by the nation, our unemployment rate continues to rise, and our tax collections have dropped. It is my hope that the analysis provided may be a point of reference to identify where we can maximize our efforts to create jobs in this economy."
The media industry, sacked most recently by the impending cuts at AOL, has been among the hardest hit of all, especially in New York.
The media capital of the world has lost more than 30,000 communication jobs in the last decade, Thompson said. In September 2000, the information services sector provided 192,300 jobs. Two months ago, that number had plummeted to just 161,500, reports The New York Post.
"The scary part of this is that not all of this is due to the recession," Frank Barconi, Thompson's chief economist, told the paper.
The information-services sector, which covers everything from print to broadcasting to new media has been undergoing major transformations in recent years. Online phenomena has forced critical changes in traditional media outlets, and many have been struggling to keep up.