The long expected cutbacks at WME will happen Monday. At the agency, 20% of its employees will either be laid off, furloughed or reduced to part time during this pandemic. This will include some ag…
informed staff just before that that they will go without salary the rest of this year, in a note that foreshadowed the current cuts. Pay cuts were expected to be as high as 30% for those making over $65,000 per year. This impacted top earners at companies across Endeavor but not UFC because that is not wholly owned by Endeavor. UFC has been a bright spot; beyond leader Dana White’s vociferous efforts to get his brawlers back in the ring, UFC has a deal with ESPN that brings in regular payments.
All of this has been a particularly bitter pill to swallow for longtime partners at WME who rep some of the biggest stars, directors and show creators in Hollywood. They had played the long game in the area of salaries and bonuses with the expectations that an IPO last September would allow them to cash out their shares at a high premium.
The company made expensive acquisitions to create a conglomerate that would be attractive to Wall Street, creating the current debt burden. When that IPO didn’t happen — the pullback was attributed to a softening market and shrinking demand from investors that made it clear targets wouldn’t be hit — those partners then waited for an April opportunity to cash out 20% of their shares on a $3.6 billion valuation. In a difficultthat event was indefinitely postponed.
But everybody at every agency is hurting right now, and the mission is to survive long enough to see clients get back to work, and for arenas and live event stadiums to fill again. The irony is that Endeavor’s diversity would have cushioned it against a possible writer’s strike this May, which many believe would have been a real possibility. Revenues from live events would have helped even if production dried up. Who could have predicted the world, and live revenue, would be shut so suddenly.
Every agency out there has enacted some form of these cuts and more will likely occur at percenteries and studios, so this is just the latest of the pain that will only get worse in the long road to recovery ahead, altering the Hollywood landscape forever. For Silver Lake, unless it wants to strip off assets in a fire sale, I don’t see any move other than for it to stay the course and weather the losses, made slightly easier by the painful cuts like the ones that will be made Monday.
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