Major film and TV production companies in the US are utilizing cost-cutting measures or consolidating amid collapsed media shares, Bloomberg reported.
Rising interest rates against the backdrop of skyrocketing inflation and a weak macro-economic climate have put pressure on media companies.
100 employees from advertising sales teams are reportedly to be fired by Warner Bros. Discovery Inc. Speculation about layoffs followed the $43billion deal merger by WarnerMedia and Discovery Inc. in April.
In August, 70 people were fired from Warner Bros. Discovery-owned HBO. CEO David Zaslav reportedly told agents and producers that movies budgeted at more than $30 million will no longer be approved for its HBO Max streaming service. That sum is roughly half of what it was before.
In similar cost-cutting developments, CNN resorted to layoffs after dropping the streaming network CNN+. Paramount Global was in “early” discussions about shutting down Showtime as a standalone service and transferring its premium content to its flagship streamer Paramount+, according to a Wall Street Journal report.
Netflix Inc. also announced another round of layoffs in June after the streaming company eliminated about 150 positions upon registering its first subscriber loss in a decade.
“The very foundation that the streaming business sits on has been devolving on sand. It’s all been shifting,” Walt Disney Co. Chief Executive Officer Bob Chapek was cited as saying.
Bob Chapek emphasized that his company was prompted by profitability concerns for 2024 for his Disney+ streaming service when it reduced its forecast for content spending this year by about 10%.
‘Pumping the Brakes’
Filming in Los Angeles County plummeted by 5.8% in the second quarter, as measured by days of shooting, with TV production down nearly 16%, according to FilmLA.
Amid a pervading sense of uncertainty, even experienced producers are reportedly struggling to get projects underway.
“Nobody wants to do anything other than sequels. It’s harder. The environment has gotten worse,” Bill Mechanic, a former head of Fox Filmed Entertainment was cited as saying.
“There is a general sense of uncertainty of when things will pick back up. There’s a general sense of where is this going and how are we going to get out of this?” said Sheenie Ambardar, a Los Angeles psychiatrist.
Even star-studded projects are being cancelled or put on the back burner. Studios are asking for 20% reductions in budgets for TV series, according to talent agents cited by Bloomberg News.
Netflix, which years before was signing high-priced deals with celebrity figures on the scale of the Obamas and Prince Harry and Meghan Markle, has also tempered its appetites for such spending sprees.
The streaming company slashed about 150 positions over its first subscriber loss in a decade in May, when shares were down 67% year to date. In June, Netflix revealed it was letting 300 employees go.
“While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth. We are so grateful for everything they have done for Netflix and are working hard to support them through this difficult transition,” it stated.
Executive recruiting firm Korn Ferry has been inundated with resumes, Senior Client Partner William Simon said.
“Everybody’s pumping the brakes,” he added.
“After Netflix announced their subscriber loss, it was a like a shockwave throughout Hollywood,” Project Casting Inc., CEO Jonathan Browne said.