Hollywood’s Endeavor eyes more cost-cutting, asset sales amid COVID
Hollywood superagent Ari Emanuel, desperate to survive the pandemic, is quietly hatching plans to trim the fat at Endeavor, his already slimmed down entertainment conglomerate, The Post has learned.
Endeavor — which reps superstars like Matt Damon, Oprah Winfrey and Christian Bale through its WME talent agency — already took an ax to its balance sheet in April as the coronavirus crushed public events, resulting in widespread pay cuts, furloughs and layoffs of roughly 1,500, or 20 percent of the staff, sources have said.
But with no end to the pandemic in sight, Emanuel and Endeavor executive chairman Patrick Whitesell are now exploring new tactics to keep the taps flowing, including selling investments in profitable startups and exiting low-growth businesses, sources said.
Endeavor — which owns the Miss Universe beauty pageant and a majority stake in the Ultimate Fighting Championship — is also looking at potentially laying off hundreds of more people next year, one insider told The Post, although the company denies any concrete plans.
“We’re fortunate to have a diverse portfolio of businesses and investments that have helped us mitigate the ongoing effects of the COVID-19 pandemic, protect our employees, and ensure the long-term health of our company,” the spokesperson said in a statement. “While we will always remain nimble in light of changing economic conditions and explore various options to strengthen our position, we are not currently anticipating additional layoffs.”
The highly leveraged company’s debt was lowered to junk-bond status in April by rating agency S&P Global, which only extended the company’s “liquidity runway” to 2021 after it secured a $260 million loan and sold assets, including stakes in Epic Games, maker of Fortnite for about $80 million.
With concerts, sporting events and Hollywood production still on hold, Emanuel and Whitesell are now looking to shave even more money from its flush venture capital unit, which buys pre-IPO stakes in companies like Uber, Warby Parker and Lyft, sources told The Post. The portfolio was recently worth three times its investments, but has taken a hit this year as its winners get culled, one source said.
In addition to Epic Games, Endeavor nabbed about $30 million for its stake in Ryan Reynolds’ Aviation American Gin when the actor sold it to Diageo in August, a source familiar with the deal said. And now it’s eyeing sales in 10 additional companies in hopes of raising another $50 million, a source with knowledge of the process told The Post.
Bankers have been engaged to sell stakes in beauty startup Glossier and online education Web site MasterClass, and the company is talking internally about selling stakes in healthy dog food delivery service Ollie and social media platform Pinterest, among others, this person said.
Endeavor is also looking to save money by dropping businesses that are viewed internally as “marginally profitable” with “no ability to grow,” including those that make money selling sponsorships and arranging venues and staffing for big events, an insider said. A second source denied this will result in layoffs, however, saying the plan is to bid adieu to operations that eat up resources the company thinks could be put to better use.
What businesses get axed is unclear, but Endeavor manages events for Fashion Week events around the world, various PGA golf tournaments, professional tennis tournaments such as Wimbledon and the Australian Open and the upcoming Rugby World Cup in 2023, according to the company Web site.
Fears of more layoffs were triggered in September when Endeavor president Mark Shapiro called a meeting with the business heads to say that more cuts were “definitely” coming, sources said. A person close to the company has denied that Shapiro was talking about new layoffs, however, saying that he was referring to previous cuts that have yet to be enacted.
Adding to the stress have been some structural changes, starting with Hollywood entertainment lawyer Lloyd Braun being tapped late last year to head up Endeavor’s talent and management operations, including WME and IMG Models, in an effort to spur more coordination, sources said.
Unit heads who used to report to the C-Suite now report to Braun, a former ABC exec and head of digital media firm Whalerock. This has rankled some staffers who have criticized his lack of agency experience, sources said.
Braun — who’s reportedly the inspiration for a “Seinfeld” character with his name — held an all-hands-on-deck Zoom meeting on Oct. 30 to announce more management changes and address the infighting, sources told The Post.
“Lloyd said if agents have an issue they need to go to him. He’s in charge of the agency,” said one insider with knowledge of the meeting. “The implication being agents are constantly going above him to Ari and Patrick and he’s pissed and wants it to stop.”
Even before the pandemic, Endeavor’s agents were fuming over the company’s failed stock debut last September, which hurt execs who accepted stock in lieu of bonuses in recent years. Once the pandemic hit, the company further angered them by pulling plans to buy back the stock.
“Most people are unhappy,” said a source. “People are worried about the company and jobs, but it’s not that surprising given the business impact and layoffs.”
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