Two of Time Warner’s new-media units will be rolled into a third in a move to cut costs within the Time Warner music division, headed by Michael Fuchs.

Internal memos issued late Oct. 4 by Warner Music Group and HBO said both Time Warner Interactive and WarnerActive would be rolled into Inscape, a CD-ROM joint venture created by Home Box Office, Warner Music Group and Nash New Media.

According to an HBO spokeswoman, the memo was not signed by any single exec. But the cost-cutting ax falls at a time when Fuchs is seeking to strengthen his position at the company, which recently agreed to merge with Turner Broadcasting System.

Michael Nash, who was video division director for Voyager Co. until he founded Inscape in 1994, is president of that company and will oversee the combined entity as CEO.

Inscape, with about 20 employees, is expanding its Santa Monica offices. WEA distributes for Inscape, which will release its first two products this month.

A spokesman for Nash said he was in New York on Oct. 5 and not available for comment.

There was no comment from Time Warner about the status of current TWI employees or management.

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