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CNN to cut staff by 25%

Steve Case and Gerald Levin were hailing the merger of their companies last week as an event that will prove to be of great benefit to consumers. And it may benefit employees, too-at least those who are left.

On the very day (Jan. 11) that AOL and Time Warner closed their deal, reports surfaced (confirmed by company insiders) that CNN would cut its staff of 4,000 by up to 25%, or 1,000 positions.

Sources said that the all-news cable network might announce as early as this week a layoff-and-reorganization plan.

The pending announcement was foreshadowed in an internal memo from CNN News Group Chairman Tom Johnson and CNN President Phil Kent issued to all CNN staffers in late November. It read in part, "This is a time of change at CNN. Aggressive programming changes. Aggressive changes in the way we gather the news. Change that will make us better, stronger faster..but that requires all of us to adapt and to realize our full potential."

The memo told staffers to look for a "detailed and wide-ranging announcement early in the new year."

Sources confirm that big cuts are expected in the CNN Interactive group that now houses some 750 employees. But exact details about cuts there and at the other CNN divisions remained unclear last week. Sources stressed that some of the job cuts would come in the form of attrition while some current unfilled posts may also be eliminated.

The changes come as CNN has suffered audience drops due to competition from both MSNBC and Fox News, both of which launched in 1996.

Sources said that, in part, the reorganization is designed to create one cohesive newsgathering operation for all the CNN news-distribution outlets, including CNN, CNN Headline News, CNNfn (the business channel), and CNN/SI, the sports news channel.

Despite the competition and the viewer erosion, the CNN division had respectable revenue growth last year. One company executive said revenues from all sources (advertising, affiliate carriage fees, etc.) totaled $1.36 billion, up 14% from 1999.