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Good Times! Hollywood Cops it! By Charles Taylor
As an American gun-owning born-again Christian, I naturally regard Hollywood as unholy, indeed demonic and evil. It is just how I think. Thus, I delight in the thought, in my mind at least, that Hollywood might soon sink into the ground and return to the pits of hell, or at least the secular, economic modified version of this. Here is something on the current economic crisis, quite distinct from my eschatological ravings, which will have to do for the time:
“ViacomCBS has laid off 450 staffers across its New York offices, meaning an additional 333 people since a mid-January filing with the state. With Hollywood first-quarter earnings season now wrapped, sector giants have made clear that more of the financial pain of the novel coronavirus pandemic will, as expected, hit their results for the current second quarter, which started after the initial virus impact in March. With revenue dragged down across divisions — from the closed theme park units and film segments affected by shuttered cinemas, to TV networks, where advertising started tanking amid the crisis despite higher ratings — it is no wonder that management teams have in recent weeks unveiled furloughs, salary cuts and other measures to reduce their cost base. "There has been a very thoughtful process on behalf of management teams about treating employees with as much respect as possible in the current times," Wolfe Research analyst John Janedis tells The Hollywood Reporter. "Temporary furloughs and salary reductions across a large portion of the employee base are a very effective way to reduce the cost base in the short term; otherwise, layoffs would need to be dramatic." There have also been some recent job cuts at firms like Comcast's NBCUniversal and ViacomCBS that have been "related to synergies from M&A and to a lesser extent reorganizations," Janedis noted. It was no surprise though that entertainment industry management teams on earnings calls faced questions about cost savings, including potential staff reductions, beyond the measures unveiled so far.
Most commentary on cost controls was vague, but it is clear that companies are exploring various measures amid a continued lack of clarity when businesses can return to regular operations. "It appears that the harsh effects of COVID-19 have forced just about every media and entertainment company to implement or contemplate significant expense cuts, almost always including workforce reductions via furloughs, layoffs or a combination of both," CFRA Research analyst Tuna Amobi tells THR in summarizing his earnings season takeaway. "Thus far, some of the most vulnerable areas include theme parks and film studios, as well as movie theaters and live entertainment. The focus of these actions will likely shift to advertising sales (and consumer products), with visibility becoming more clouded in those areas." Janedis, meanwhile, says that "as of now, we’re not forecasting any unannounced cuts," but adds, "That being said, if the current pace of business continues into the fall, the industry will need to take actions that would be more permanent in nature." The second-quarter earnings updates could provide some color on the effectiveness of cost savings introduced this quarter and potential layoffs, but for now, Wall Street observers say it is hard to estimate them. Vogel Capital Management CEO and former entertainment analyst Hal Vogel tells THR that it is "impossible to quantify [savings] as an outsider," but says that pressures are biggest in businesses with high fixed costs: "The biggest numbers are for big employers like theme park [operators] Disney and Comcast." Explains Moody's analyst Neil Begley: "Clearly, Disney will lead in the furlough [or] body count given their exposure to big parks. But all other companies exposed to congregation of both employees and customers will likely see furloughs/layoffs — those related to parks, studios, theatrical, live theater, advertising, live events, such as concerts and sports, etc. The exceptions are in animation, streaming and video gaming."
The sooner they all go bankrupt the better in my opinion.