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FutureStarrThe Impact of Warner Bros. Discovery's Layoffs on the TV Industry
Fans are upset with a multiyear boom in TV production being cut short, particularly after numerous shows featuring marginalized voices were cancelled following its merger, such as Batgirl and Gordita Chronicles. As executives in the merged company attempt to identify $3 billion in savings, various departments are being targeted; one such area being advertising sales. The Impact on Production WarnerMedia recently started firing employees following its merger with Discovery. According to Axios, around 100 workers will be laid off from both ad sales departments at both companies. WarnerMedia executives--formed as a result of AT&T's $200 billion purchase of Time Warner and CNN--have recently made moves to reduce expenses, as interest rates rise and economic conditions worsen, increasing costs associated with funding content pipelines for media giants like AT&T's acquisition of Time Warner and CNN. Many media companies have already cut production budgets or cancelled shows altogether as part of cost cutting measures while some have even eliminated jobs to meet this objective. Discovery's layoffs will have a direct effect on TV programming; most severely they'll hit its ad sales teams; however, production could also feel the strain - these teams produce both unscripted and scripted series like Emmy Award-winner "Ted Lasso," hit show Abbott Elementary and reality franchises such as Fixer Upper 90 Day Fiance and Diners Drive-Ins and Dives among many others. Sources tell Variety that these cuts will impact multiple departments at the studio, including its ad sales and marketing teams which will see major staff reductions, its distribution department - which handles physical and digital networks, and executive level positions - and even some administrative functions that have been eliminated altogether. Warner Bros. recently initiated layoffs, prompting widespread dismay among viewers, former employees and creators of cancelled shows alike. Under new CEO David Zaslav, cost cuts ranged from canceling completed shows like "Batgirl" to ceasing production for MGM movie division. Twitter has seen viewers, former employees and creators express their confusion and distress at these changes of leadership. The Impact on Marketing All across the industry, similar trends are manifesting themselves: A multiyear boom in film and TV production has come to a sudden halt, prompting companies to reduce workforce numbers by cutting jobs or cancelling shows altogether and revamping business models. One prominent example of such layoffs is Warner Bros. Discovery, which recently reduced job positions across multiple divisions following their merger with Discovery Communications. These layoffs affected employees at all levels within the organization - even those still in their first weeks at the newly combined firm. HBO/HBO Max reportedly laid off over 70 of their employees, including entire teams responsible for unscripted programming, children and family programming and international content production - as reported by sources. These layoffs also affect HBO/HBO Max's upfront sales team and marketing teams. Layoffs are part of Discovery's larger effort to "right-size" its new company following the $43 billion merger with Warner Bros. earlier this year. Through staff cuts and other measures such as travel expense savings or supplier cuts, it is expected that $3 billion can be saved post-merger. Changes within the kids and young adult division are anticipated to impact marketing executives like Tricia Melton and Cartoon Network and Adult Swim's Senior Vice President of Marketing & Partnerships Jill King as well as other top marketing leaders, such as HBO Max Casey Bloys' Senior Vice President of Strategic Planning & Programming Max Casey Bloys as well as Karen Bronzo's SVP of Brand & Creative Development for Cartoon Network Studios Karen. In 2021 these individuals may leave their positions. According to sources, approximately 30% of Discovery and WarnerMedia's combined ad sales team will be cut in the next several weeks in an effort to save money on payroll and other costs. This move is anticipated to have a devastating effect on forthcoming upfront negotiations that could threaten to significantly diminish their revenue prospects; additionally it may increase employee turnover as staff flee sinking ships. The Impact on Ad Sales Film and TV production saw a multiyear boom, but that has now given way to firings, consolidation and handwringing. Few people would wish to work in media when companies put financial interests ahead of creative ones and send a chilling signal that quality may be sacrificed in favor of quick profits. Warner Bros. Discovery signaled trouble when they announced that they are consolidating ad sales teams in the U.S. and cutting up to 30% of staff reportedly as they aim to save costs amid slow advertising revenue growth, reports suggest. WBD has made efforts to reduce costs in other ways as well, such as cancelling completed projects such as the Batgirl movie and purging content from HBO Max streaming service. Furthermore, they recently increased upfront ad prices on their channels, seeking CPM (cost per thousand viewers) increases of up to 25% while leaving no room for negotiation with buyers. WBD's move will have a substantial effect on its ability to attract new advertisers, as it will make their services less appealing to marketers who can find cheaper alternatives for their campaigns. Furthermore, it will limit how many channels agencies and advertisers can purchase across WBD platforms. As WBD's assets remain difficult to sell, sales staffers may need to become even more persistent and creative in their pitches in order to succeed at selling them - and as the industry begins its slow down phase, this challenge will become greater. WBD's layoffs reveal much about its corporate culture and vision for entertainment's future, showing they will do whatever is necessary to maximize profit - including firing staffers, canceling movies and shows, raising ad rates beyond sustainability, etc. If its current course remains unchanged for too long, WBD won't survive long term. The Impact on Distribution Since the Discovery-WarnerMedia merger, company leaders promised dramatic cost cuts. But recent events have many people questioning just how drastic those reductions will be; from shelving a nearly completed Batgirl film to trimming content from HBO Max subscription service - and these bad vibes can only worsen with time. IndieWire has learned that WBTV trimmed 19 percent of its current staff by cutting 82 employees and 43 open positions across its scripted, unscripted, and animation divisions - this represents 19 percent of their current employees who work on shows like Ted Lasso: Abbott Elementary vs the World and recent Emmy-winning season of "The Bachelor." WBTV announced in June that it had reduced staff in its domestic TV ad sales team by roughly one-quarter; then in September, WBTV cut 14% of international staff; as well as eliminating an executive who oversees co-productions and casting activities abroad. This week, CBS Corporation initiated another round of layoffs on its in-house production team with 82 current employees and 43 open roles being eliminated - this includes creative and development departments responsible for shows such as Two Sentence Horror Stories on CW and "Bachelor." Reorganizations was not the cause for these employees leaving, rather money is simply not sufficient enough to support their teams anymore, according to Deadline. Reorganization efforts at Warner Bros. Discovery are focused on increasing in-house productions to compete with Netflix, Disney+ and other streaming giants as millions of cable subscribers cancel subscriptions annually. On May earnings call, CEO David Zaslav reported he expects their direct-to-consumer products will break even by 2024. Insiders expect more layoffs next week as Warner Brothers steps up its cost-cutting target to $3 billion, particularly among sales support roles. But one of the most egregious actions will be closing digital production studio Stage 13 and Warner Brothers Television Workshop - two initiatives intended to foster new talent - sending an unmistakable signal that this kind of creative expression doesn't matter at all to management.