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TCI Is Firing 2,500 Workers, Cutting Salaries

December 06, 1996|From Bloomberg Business News

ENGLEWOOD, Colo. — Tele-Communications Inc. said it is cutting 2,500 jobs, or 6.5% of its work force, and freezing or reducing salaries for up to 100 senior managers, including Chairman John Malone.

The nation's largest cable television operator said that in an effort to cut costs it also is reviewing expenses in its 1997 budget that aren't directly related to serving its 14 million cable TV customers.

The job cuts and salary actions come as Tele-Communications seeks to boost its cash flow and assure investors that the company can retain its customers in the face of subscriber rate increases. The company said it is making the moves to stem losses, compete better and reduce its $14.5-billion debt.

"All this is indicative of serious problems at the company," said Hal Vogel, an analyst at Cowen & Co. in New York.

Spokeswoman LaRae Marsik said Tele-Communications began notifying employees Wednesday that they will be fired and receive a severance package.

Shares of Tele-Communications rose 50 cents to close at $13.63 on Nasdaq.

The moves are expected to save about $75 million in annual overhead costs, said Christopher Dixon, an analyst at PaineWebber Inc. In the first nine months of 1996, the company had general and administrative expenses of $1.87 billion.

Tele-Communications had a 1995 loss of $120 million on revenue of $5.1 billion.

The salary reductions and freezes will affect 50 to 100 executives, including Malone. Marsik said none of the company's executives have been fired.

"Salary reductions for [key executives] range from 5% to 20%," she said. "You may assume that the effect on John [Malone] will be among the biggest."

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