“You can’t just keep growing.” Media analyst Hal Vogel described the recent spur in layoffs at both 21st Century Fox and Yahoo! as such. This week, both media giants announced massive cuts to their overall business in an effort to consolidate and focus future efforts. As of Monday (1 February), 21st Century Fox initiated buyout plans to push long-time employees from the film and television divisions into early retirement, aiming for an overall cut of $250 million. Yahoo! is using essentially the same technique to scrap 15% of its workforce.
In a year struck by a fluctuating market (day one of trading broke an 81-year-old record for lowest start to a new year, before leveling out a week later, and plummeting again another week later), it may not seem out of the ordinary for companies to scramble for balance. Yet, neither company looks too shabby from the outside. Sure, Fox had Fantastic Four in its write downs, but four films with Oscar credibility and solid performers like Spy and The Peanuts Movie should even the books out. And Yahoo! has their hands in all corners of the marketplace – certainly not the behavior of a failing company.
Therein lies a problem. These companies, much like Twitter and ESPN in October 2015 and Warner Bros. in November 2014, see the writing on the wall and are using pre-emptive measures to buoy their first quarter results. If much of that sentence sounds cold and corporate, it is, as are these events.
Yahoo! internally has struggled financially since a failed plan to spin off stake in Chinese Internet titan Alibaba in December, as well as $42 million in losses on television series Community and other launches aimed at streaming. They have been scrutinized only by those paying attention (unless you have money vested in the company, this is not you), meaning many did not notice when they eliminated Yahoo Screen or were sued this week for unfair termination and discriminatory practices, a lawsuit reflecting a sketchy method of deciding who gets the boot.
Meanwhile, 21st Century Fox should be concerned that their breadth of programming has become a crutch. Since the American Idol days, Fox Network has had a rough go at reclaiming its place as #1 broadcast network. Though lucky draws such as a reboot of The X Files and a live performance of Grease have eased concerns, the network is uneven overall in the key demographics – Scream Queens did not capture those impressionable tweens as hoped, Nick Jonas and all.
Additionally, FX has bloated past the point of turning a profit on any new program. While critics are raving over the content, it is nearly impossible to push niche programming such as You’re The Worst to American Horror Story levels. In fact, any FX show not touched by Ryan Murphy has struggled to find its core audience.
All of this information being spouted out of the news stream so matter-of-fact, but without a thread to stitch it all together. What does it mean when the companies backing our favorite networks, programs and internet content are making bold moves at cutting back? It means, at face value, that these companies have overcompensated at adapting to what we want in the age of binge-watching, music streaming, live tweeting and – all together now – piracy. 21st Century Fox, Yahoo!, Twitter, Warner Bros, ESPN – each reacted to the market and, like a fat kid told to catch up in a race, burned themselves out.
They reached for too many areas, too quickly, and now are continuing to react. These cuts are calculative and manipulative, and nothing we do not expect from recently appointed 21st Century Fox CEO, James Murdoch – yes, that Murdoch. Or Marissa Meyers, head of Yahoo!, whose techniques are currently being questioned by a judge. Or Jack Dorsey, head of Twitter, who may or may not have forced out his chief officers to save a penny or two. It’s business guys, it’s not personal.
“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.”
Does that make you feel better? Honestly, to remain in the game, these probably are the best options available, but to problems the companies themselves created. These cutbacks mean that media giants are looking to protect their most important asset, themselves. And, unfortunately for those currently out of a job, this really does not boil down to workforce. This issue boils down to what we are seeing on Wall Street – a lack of confidence.
Look at these layoffs deeper than the headlines and the ratings and the stock prices – and you will find that this trend of reductions in Hollywood signifies a deep rooted issue. There is no strategy. Not one of these CEOs had the foresight to plan for the changes brought about by the Internet and streaming, so they scrambled to stay relevant. Then, not one of them could predict that overreaching can be just as detrimental as doing nothing at all, so they pull back.
We see it in programming choices everyday. Safe choices. Middle of the road. Guessing, but not knowing what people want, in an industry built on desire. How can we expect to ever grow and and succeed if there is no actual plan to do so, if the only mitigation of risk, is the elimination of risk altogether? If 21st Century Fox and Yahoo!, and all their contemporaries are serious about using these layoffs to build for the future, they need a plan, and they need confidence. They can no longer wait for the market to determine their moves. Make a move and trust it.