“As all of you are aware, industry conditions have been challenging due to the financial crisis, which has produced sharp decreases in advertising spending. This is expected to continue through most of 2009.

It’s important that we at Time Inc. react quickly to this new reality in order to maintain our financial strength, build our market position, and sharpen our ability to bounce back at the first signs of economic recovery. All the while we must continue to give our readers and audience the high quality editorial products they have come to expect from our publications and websites.

This is a challenge, unlike any we’ve seen before. And after much careful study and consultation with many of you who run our businesses, I have concluded that it is no longer possible to operate our company with the same decentralized management structure that served us so well during our many years of sustained growth.

So, effective tomorrow, we are going to implement a much more centralized management structure, organized into three business units that will group together titles that share similar audiences, advertisers, and the talents and skills of their staffs.  The goal is to enable our company to move faster, go to market smarter, save significant costs, and employ our editorial resources more efficiently.
In broad strokes, here is how it will work:

Business Units. Time Inc.’s 24 U.S. magazines and companion web sites will be grouped into three business units, each reporting to a senior corporate executive. Each unit will have a similar structure that will include four key executives to direct the ad sales, digital business, financial and editorial efforts across that group. One of the most significant centralizing features of this new structure is that each of the three units will have one General Manager, responsible for all budgeting in the unit, who will report directly to Time Inc. EVP and CFO Howard Averill, with a dotted line to their respective senior operating executive.

The three Business Units will consist of:
—News: the existing print and digital properties in the TIME group, the Fortune|Money group, and the Sports Illustrated group, as well as Life.com and GEE. John Squires, EVP Time Inc. will manage the News Business Unit. Full memo after the jump… 

—Style and Entertainment: the existing print and digital properties in the PEOPLE group,  InStyle, Entertainment Weekly, and Essence. I will act as the EVP for this group so the Style and Entertainment Business Unit will report to me. 

—Lifestyle: the existing print and digital properties of Real Simple, This Old House, All You, Southern Living, Cooking Light, Sunset, Health, Cottage Living, Coastal Living, and Southern Accents, along with MyRecipes.com and MyHomeIdeas.com. Sylvia Auton, EVP Time Inc. will manage the Lifestyle Business Unit, while also retaining responsibility for IPC Media.

Editorial. John Huey continues as Time Inc.’s Editor-in-Chief, overseeing the News Business Unit Managing Editors and Martha Nelson, the Managing Editor of the Style and Entertainment Business Unit.  In editorial alone we have seen three recent examples of how this sharing across titles can work to our benefit. During the summer Olympics, Sports Illustrated set up a system to supply Time.com with a fantastic array of photos from the games; in Europe and Asia, FORTUNE and TIME already are sharing correspondents; and, of course, the most visible example was the recent TIME cover story on the economy written by FORTUNE managing editor Andy Serwer and Allan Sloan. In the new structure we will see much more of this kind of cooperation.

Time Inc. Advertising Sales and Marketing. Given the difficult ad sales environment, it is critical that all of our brands work together to efficiently and effectively offer advertisers the solutions they need. For this reason, we are creating Time Inc. Advertising Sales and Marketing, a group that will be charged with setting and executing corporate ad sales strategy along with the ad sales head for each business unit.  Stephanie George will become President of Time Inc. Advertising Sales and Marketing and will remain a Time Inc. EVP. She will also remain on the Board of American Express Publishing.

Time Inc. Consumer Marketing and Sales. Consumer Marketing and Sales will be run by Brian Wolfe, who has been promoted to EVP and will report directly to me. All Consumer Marketing and Sales activities will be centralized under Brian. This department will be responsible for circulation net income across all U.S. Magazines, as well as Synapse, QSP, Time Warner (NYSE: TWX) Retail, Time Customer Service, and TW4, Time Inc.’s international fulfillment operation.

Everyone in the Consumer Marketing organization should be proud of their accomplishments in this difficult environment – some of our largest newsstand titles are having record years and we are seeing strong circulation net income results across the company. These organizational changes, along with the recent acquisition of QSP and the incorporation of Synapse into Time Inc. Consumer Marketing and Sales, will give Brian and his team the ability to continue this momentum by making the best decisions for the company as a whole, and making them quickly and definitively.

Finally, I’m pleased to announce the promotions of Kerry Bessey and Maurice Edelson to EVP, Time Inc.

Time Inc. Senior Management along with the Business Unit leaders are working on restructuring within each group, and will announce further changes in the coming weeks. While the broader economy and the advertising industry both continue to present challenges, I know we can weather this storm and emerge as an even stronger company when the economy begins to recover. We are still a very profitable company. Our cash flow is strong. We have made tremendous progress with our digital business.  Each month, more than 26 million people visit Time Inc. websites. We know our consumers continue to value our magazines and websites.  We have the top brands in all the categories where we publish and we’re finding exciting new ways to expand our titles beyond the printed page and the web.  The importance of fact-based journalism has never been clearer given the many serious issues facing the world and our core competency, trusted editing skills, has never been more needed than in this time of too much information.

I’d like to thank you all for your continued hard work.”