Discovery Inc. is in the midst of laying off hundreds of employees.
A radical headcount reduction is central to Discovery’s current campaign to eliminate $US hundreds of millions in costs in 2020.
I hear that the layoffs and other cuts affect all of the company’s activities, from corporate to programming, and from new hires to veterans.
Financial Challenges
- Discovery’s cuts follow the shift by viewers, and the advertisers who target them, to online platforms.
- Subscription revenues are also in decline, impacted by cord-cutters and cord-nevers.
- Senior execs are motivated by another factor:
- These deep cost savings shape Discovery Inc’s financials for the company’s future sale.
- Discovery lacks the scale and business model to compete with the new video giants led by Netflix, Google/YouTube, Disney, Apple, and the others.
- Selling the company must be the focus of Discovery’s senior executive team.
Programming
- More than $100 million is targeted for cuts to programs.
- These savings are coming out of the budgets for Discovery’s legacy channels and the Lifestyle networks formerly operated by Scripps.
- The production community that serves Discovery’s networks is likely to experience slower deal-making, fewer episodes per series, deferred deliveries and premieres, and cancellations of planned shows.
Peter’s Takeaways
- These cuts to staff and programming are so deep that the remaining teams will struggle to dig out from the paralyzing fear that envelops the company this month.
- Discovery’s programming execs will have to fight to get the internal green lights for the fresh programming solutions that will attract viewers and bolster their great but diminished brands.
- According to my back-of-envelope estimates, Discovery still spends upwards of $1 billion / year on documentary and unscripted programs. That’s far, far more than Netflix and the streamers.
- Producers must grasp the reality of Discovery’s tough situation, while remembering that the Cab/Sat network category as a whole will remain a major buyer of programs.
