Magazine publisher Condé Nast and digital news outlet BuzzFeed have announced additional layoffs, furloughs and cost cutting measures due to the COVID-19 pandemic. Like so many media outlets, Condé Nast and BuzzFeed have lost ad revenue because businesses cannot afford to advertise right now, and the publishers have to cut costs to try to sustain themselves.
According to Publishers Daily, the 111-year-old Condé Nast, which publishes Vogue, The New Yorker, Vogue, Vanity Fair, GQ, Wired and other magazines, is laying off 100 U.S. employees and furloughing another hundred, or about 7.4% of the company’s U.S. workforce of 2,700. Other employees will have a reduced work schedule. Those who are let go will get a severance package and access to job placement resources. The company will continue pay health care premiums for furloughed employees. Employees got the news in a memo from Condé Nast CEO Roger Lynch Wednesday.
“We’ve deferred projects and initiatives, closed hundreds of open roles and limited hiring, renegotiated contracts and temporarily reduced salaries for those with higher incomes, including our leadership team, our board and me,” Lynch added.
The salary reductions started in April. Employees making $100,000 or more received pay cuts of 10% to 20% for five months, beginning May 1. Senior managers are having their pay reduced by 20%, including Vogue editor-in-chief and Condé Nast artistic director Anna Wintour. Lynch and external members of the board are taking a 50% pay cut. At the time those cuts were announced, Lynch suggested that additional cost cutting measures might be necessary.
“While we aren’t as solely dependent on print and digital display advertising as some of our competitors, globally, we will still see a substantial impact from this crisis on our business,” Lynch said in a memo to staff. “It’s very likely our advertising clients, consumers and, therefore, our company will be operating under significant financial pressure for some time. As a result, we’ll need to go beyond the initial cost-saving measures we put in place to protect our business for the long term.”
BuzzFeed has found itself in a similar position. Effective May 16, the media outlet is putting 68 employees on furlough for three months, imposing salary cuts for other workers, and is considering pressing pause on 401(k) matches through year-end, reports Bloomberg. In addition to the furloughs, BuzzFeed is hoping to sublet offices in Minneapolis and Washington, and it has imposed a hiring freeze on 50 open positions.
“The global economic downturn caused by the coronavirus pandemic has inflicted increasing negative impact on our business. In recent weeks, we have been confronted with even greater revenue declines than expected,” said Jonah Peretti, BuzzFeed co-founder. “We need to lower our costs and change how we operate to get through this crisis.”
The first round of COVID-related cuts came in March when Peretti imposed pa reductions of 5% to 25% depending on the size of the staff salary. Senior executives were to get larger cuts than employees who are paid less. Peretti is foregoing his salary until the coronavirus and subsequent economic crisis have passed.
“I understand this will be a real hardship for everyone, but our goal is to make it possible for all of us to get through this,” Peretti wrote in a memo to staff.
Condé Nast and BuzzFeed are only two of the many publishers laying off and furloughing staff and imposing pay cuts and other cost cutting measure. In April, WWD reported that Meredith Corp. was planning to cut pay for 60% of its staff of 5,000, temporarily stop dividends, and it has withdrawn its guidance for 2020, not knowing what lies ahead.
“The COVID-19 crisis has created an extremely challenging business environment, including significant advertising campaign cancellations and delays,” said Meredith president and CEO Tom Harty. “While our financial position is strong, given the impact on advertising — which represents approximately half of our revenue mix — we are proactively taking aggressive actions to strengthen our liquidity and enhance our financial flexibility in the near-term to effectively navigate the current environment.”
Insider Take:
These are just the latest media organizations impacted by COVID-19 in an unpredictable advertising landscape. Those hit the hardest are those who rely most heavily on advertising revenue for sustainability. Meredith, with 50% of its revenue coming from advertising, was particularly hard hit, where The New York Times, for example, has diversified its revenue in recent years, making it less reliant on sometimes fickle ad dollars. At the end of the first quarter of 2020, advertising revenue only made of 23.9% of The Times’ total revenue. The coronavirus crisis is undoubtedly a painful lesson for publishers.
