Fox to reduce workforce; targets $250 million in budget cuts
21st Century Fox intends to trim its West Coast workforce to help reach $250 million in cost cuts this year at its TV networks and film studio.
Fox’s corporate bottom line has been under increased pressure because of higher programming and marketing costs. In addition, several of Fox’s TV networks have grappled with lower ratings and lower advertising revenue.
The dramatic cuts — announced Monday — reflect an increasingly turbulent media environment. Consumers are migrating to digital platforms for entertainment and canceling or scaling back their traditional pay-TV subscriptions. That means less revenue for Fox and other programming companies that rely heavily on cable programming fees for profits.
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“Our industry is changing rapidly, presenting new challenges and even more opportunities,†Fox TV Networks Chief Executive Peter Rice wrote in an email sent Monday to TV employees to notify them of the staff cuts.
He said the company would offer a “generous benefit package†to workers who volunteered to leave in late May. The date coincides with the completion of the current TV season.
“We need to adjust, adapt, and organize for the future,†Rice said. “We will be undertaking some structural changes, increasing investment in some parts of the company while making cost reductions in other areas.â€
Rice stressed the buyout program would be “completely voluntary.â€
The buyouts were announced the day after Fox Broadcasting’s ambitious musical, “Grease Live,†scored huge ratings with more than 12 million viewers tuning in for the TV extravaganza, which was performed in Burbank. The TV event performed particularly well among young audiences.
In addition, two films distributed by Fox — DreamWorks Animation’s “Kung Fu Panda 3†and “The Revenant†— grabbed the largest hauls at the box office over the weekend.
“We must be cognizant of the industry’s transformation and position ourselves to continue our success in this new environment,†20th Century Fox Filmed Entertainment Chairman Jim Gianopulos said in a separate memo to his staff.
“To that end, we are reviewing our organizational structure and looking at potential cost reductions to position us for sustained future growth,†Gianopulos said.
Fox reports its quarterly financial results next week, and Wall Street analysts have been monitoring Rupert Murdoch’s company’s numbers. Some analysts were disappointed late last year after Fox’s earnings failed to meet expectations.
The company is looking at additional ways to trim expenses — rather than relying simply on staff cuts — to reach the $250-million target, according to a knowledgeable executive who declined to be identified discussing internal matters.
The job reductions appear to be concentrated at Fox’s West Coast operations on Pico Boulevard in Century City.
Buyout offers would be made to “Fox colleagues who have extended tenure,†Gianopulos said. “These offers are being made to recognize the significant contributions our colleagues have made during their time at the studio.â€
A Fox spokesman declined to specify how many people the company planned to shed or whether layoffs would follow if the buyout package failed to attract enough volunteers.
Fox’s move follows similar cost-cutting efforts last year at Viacom Inc., Time Warner Inc. and other media companies.
“This is the right thing to do for our business because although technology is rapidly changing our world, the global hunger for our brands and content will continue unabated and making the right decisions now will provide our company with many exciting opportunities for continued growth and success,†Fox’s Rice wrote in his memo.
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