21st Century will spend the year looking to trim $250 million from its personnel costs. The corporation sent out the following statement, hoping to accomplish that high number through tenured employees who would exit for generous packages. Here’s the corporate statement: “As we position 21CF for the future, we want to ensure our organization remains agile and structured to fully capture the many opportunities ahead of us. With this we are looking across our film and television businesses to transform certain functions and to reduce costs. As part of this process, which is in its early stages, today some colleagues from Fox Networks Group and 20th Century Fox will be offered a generous benefit package if they opt to voluntarily leave the Company.
From what we hear, the goal is not to go too deep with the cuts, which will be spread over all divisions of the company, targeting the streamlining of the current operations. Rumors about trims on the TV side, especially in production, had been swirling. There are some apparent redundancies that have had people talking. For instance, sources had pointed to the fact that there have been no layoffs following the merger of cable divisions Fox 21 and Fox TV Studios, leading to some overlap. Some observers see even further closer integration of Fox’s cable production involving Fox 21 Studios and sibling FX Prods.
According to insiders at the company, the film division has always been the leaner side of the studio. Although the film side started out the year a bit shaky with titles like The Longest Ride and Frankenstein, it ended the year on up an up note with The Revenant and The Martian which are doing well at the box office and also both got a bevy of Oscar noms. The Revenant leads with 12 nominations. The film studio is said to be looking for ways to cut.
Likely, marketing spends will be trimmed and possibly theatrical distribution (perhaps the office that the late Fox distribution chief Tom Sherak opened year ago in Calabasas will be closed?). We also expect Home Entertainment to be hit with layoffs. The company was expecting to cut back in that division anyway.
21st Century Fox is the latest traditional media to announce major cost reductions in face of declining profit margins in a changing landscape dominated by cord-cutting, decreased linear viewership and rising multi-platform consumption. Time Warner and Viacom also recently underwent similar cuts.
Here are memos, one from Fox film boss Jim Gianopulos, and the next from TV chief Peter Rice:
February 1, 2016
As we all know, the film industry is facing many significant changes, and we are no exception. While we continue to succeed on many fronts, such as garnering an extraordinary 30 Academy Awards nominations and; last year, setting an all-time industry box office record, we must be cognizant of the industry’s transformation and position ourselves to continue our success in this new environment. To that end, we are reviewing our organizational structure and looking at potential cost reductions to position us for sustained future growth.
As we embark on this review, we are taking the opportunity to offer 20th Century Fox colleagues who have extended tenure an enhanced benefit package if they elect to voluntarily resign from the company effective at the end of May 2016. Colleagues who are eligible for this program will receive a confidential email with the details of the offer. The program is completely voluntary, and these offers are being made to recognize the significant contributions our colleagues have made during their time at the studio.
This comes at a time that is both exciting and challenging for the company. We are the best at what we do and will continue to excel, but we also have to be fearless about transforming, and embrace both change and opportunity. If we structure our organization for the media world ahead of us, we will continue to thrive and make 20th Century Fox a stronger and more agile company going forward.
Thank you for your continued contribution and dedication.
Our industry is changing rapidly, presenting new challenges and even more opportunities at every turn. For a company that has always embraced change and innovation, these are exciting times. To ensure we make the most of this new world, we need to adjust, adapt, and organize for the future. With this in mind, through the remainder of this fiscal year, we will be undertaking some structural changes, increasing investment in some parts of the company while making cost reductions in other areas.
During the past 18 months, we have aligned our company around our core consumer-facing brands: reorganizing Fox Sports; expanding FX Networks; bringing together Twentieth Century Fox Television and FBC; uniting our ad sales teams into a leaner and more agile operation; purchasing True X; creating the new National Geographic Partners; and, most recently, restructuring our international channels to capitalize on our expertise in major regions.
As the next step in this reorganization, colleagues who fit a specific set of criteria will be offered a generous benefit package if they decide to voluntarily resign from the company, effective May 23, 2016. Colleagues who are eligible for this offer will receive a confidential email in the next few hours with specific terms and benefits. Again, the program is completely voluntary.
This restructuring is coming at a time when all of our businesses are hitting new heights, which I know may be confusing. Last night’s Grease: Live on FOX was a groundbreaking and spectacular production. The premiere of the X-Files, made by Twentieth Century Fox Television for FBC, was watched by a global audience of more than 50 million people. Fox Sports is home to many of the world’s biggest sporting events including last week’s NFC Championship game, this month’s Daytona 500, the next World Cup and next year’s Super Bowl. American Crime Story, which is produced by Fox 21 Television Studios and FX Productions and premieres on FX tomorrow, is one of the year’s most anticipated new series. Our new partnership with National Geographic has made us the world leader in visual factual entertainment across all platforms. These are just a few of the highlights across our business that, when taken together, make this an incredibly exciting creative time at the company. It is important, however, that we organize ourselves for tomorrow rather than resting on the laurels of today, and the best time to do that is when we are in a position of strength.
I realize change is difficult, but we will be stronger if we take this opportunity to position our organization for the future. 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. I thank you all in advance for your professionalism and support.