Magazine article Variety

Buyouts Signal a Generational Transition

Magazine article Variety

Buyouts Signal a Generational Transition

Article excerpt

The disruption in the entertainment industry has taken on new urgency for hundreds of mid- and senior-level executives in the past year.

The voluntary buyouts accepted last month by 400-plus long-serving employees of 21st Century Fox are the most visible example of a generational transition under way in the showbiz workforce. Other companies - including NBCUniversal, Warner Bros., Turner, Viacom, and Disney - have recently taken similar steps to prune their payrolls of positions that have become less vital or even outmoded in the new world order.

All of this means there is a wave of seasoned, well-connected execs Hooding into the job market. These are people who came up the ranks in the'80s,'90s, and early 2000s - a time when TV, particularly cable TV, was Hush with profits and promise.

Fox's goal is to save $250 million in staff overhead costs next year. Discovery Communications is looking to slash $40 million-.$60 million in personnel costs with a voluntary buyout program disclosed last month. Inevitably, such cuts hit hardest among older executives with long tenures, who pull down bigger salaries than their younger colleagues.

Fox's buyout was specifically targeted to those with if» years or more service under their belts; that set the age parameters from the get-go. The program was voluntary, but the execs knew that layoffs would follow if Fox didn't get enough takers for the buyouts, which by all accounts were extremely generous (and included confidentiality agreements).

In economic terms, show business is experiencing a classic Joseph Schumpeter scenario: Creative destruction of existing hierarchies and jobs frees up resources and makes room for companies to be innovative and adapt to changing times. When a half dozen MVPDs dominate the U.S. pay-TV distribution landscape, it's hard to argue that a company needs dozens of people working in affiliate sales and marketing. …

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