Two days after the announcement of the new Disney-ABC leadership made the prospect of the pending Disney acquisition of Fox assets very real, Fox leaders Peter Rice and John Nallen held a Town Hall meeting to reassure the company rank and file. Rice, President of 21st Century Fox and Chairman and CEO of Fox Networks Group, is headed to Disney as Chairman, Walt Disney Television and Co-Chair, Disney Media Networks. He took questions related to the assets and staffers moving to Disney. Nallen is Senior EVP and CFO of 21st Century Fox and soon-to-be COO of New Fox. He fielded inquiries re: New Fox.
Rice, who opened the meeting, reiterated that the company will be prepared for a January 1 transaction close as the Disney acquisition is expected to be completed anytime during the first half of 2019. That involves Fox’s organizational process readiness; the transition of people will take about a year after the official transaction date.
There were a lot of questions today about the so-called “shared services” employees, including in legal and human resources, who work for both businesses that are moving to Disney and units staying at Fox and are considered most vulnerable in the transaction. (Read my story Disney-Fox Deal Leaves Fox Television Group Executives In Limbo) Some people jokingly used pseudonyms when asking punted questions; I hear one guy introduced himself as Bob Iger.
Rice explained that Disney is de facto buying the entire 21st Century Fox and then spinning off New Fox, so all shared services employees automatically move to Disney. However, New Fox (called Fox) will get first crack at hiring them. If they are not appointed by Fox, they will go into the Disney pool. If there is no job for them at Disney, they will be entitled to severance packages.
And these cannot be just any jobs. As I reported, Disney is known for its lower base salaries. If Disney does not offer Fox employees substantially comparable jobs in terms of compensation as well as location, they can opt for a severance package.
Also brought up was the culture class between Fox and Disney.
Rice sounded confident in Disney’s track record of integrating companies well, noting that Disney CEO Bob Iger had told him that Disney would welcome the Fox culture. “Disney is the only studio started by an artist,” Rice stressed. “It’s fundamentally creative. It’s not a cable company, not a phone company, it has creativity at its core.”
Looming layoffs was the issue of many employees’ minds as Disney is targeting as much as $2.6 billion in post-acquisition cost-cutting by eliminating redundancies and laying off at least 5,000 people, 2,300 on the Fox side and 1,700 on the Disney side, in TV and film combined. (Some insiders and analysts have pegged the number of pink slips at 5,000-6,000 or even more, as high as 10,000.) Fox’s current workforce is at 22,000, including the divisions that will continue as New Fox; that means that the units moving to Disney will likely see a significant percentage of their staffs laid off.
Those seeking specific answers did not get them today. “Inevitably there are going to be layoffs,” Rice said without elaborating further.
A joint Disney-Fox committee reportedly has been working since Labor Day on identifying redundancies. “That’s happening now and will be happening over the next weeks and months,” Rice said about the integration of the two teams, noting that leadership will decide who will be let go using “best person analysis.”
Nallen noted that there are less layoffs expected at the New Fox and the Fox network/Fox News as the company has to continue to run those businesses. There will be no hiring freeze at Fox, with priority for filling positions given to internal candidates who may need a new job. He also touted the progress already made at the leaner new company.
Fox toppers had been reassuring staffers from the moment the Disney-Fox deal was first announced last December. At a town hall meeting later that very day, the executives stressed that there would be an effort to minimize staff cuts and those affected will be offered “significant” severance packages. I hear they are in line and possibly a little more lucrative than the voluntary buyout packages offered to select long-time Fox employees a couple of years ago. (Those employees got a month’s salary for each year they had worked at the company.)
The message was reiterated in an email Fox employees received from an HR executive earlier this week, which said that “in the event there isn’t a home for you at Disney or Fox, we’ve made sure there will be a generous severance policy. Anyone who Disney decides not to retain within the first year after close will be entitled to severance. This also applies if you received and declined an offer from Fox.”
I hear Fox has set up an internal Web site where every employee can check what their severance package would be should they get laid off. For those moving to Disney, all benefits and pensions will transition with them.
As announced in December, Disney will be leasing the Fox lot for seven years after the acquisition is completed. There were questions today when divisions headed to Disney, like FX and Nat Geo, would relocate. There are no specific dates yet beyond “sometime in the next seven years.”