With the pressure on to deliver $3 billion in promised annual cost savings following the $43-billion merger that formed Warner Bros. Discovery (WBD) in April, the company is looking to eliminate about 30% of its roughly 3,000-member global ad-sales team over time.
WBD has begun the process by offering voluntary buyouts, knowledgeable sources told The Information, which first reported the news.
The goal of eventually cutting about 1,000 ad-sales jobs and the buyout offers have since been confirmed by sources cited by other outlets, including Reuters.
About half of the company’s ad-sales staff are based in the U.S.
Sources did not provide a specific timeline, but said that layoffs and other non-voluntary measures would follow the buyouts. Natural attrition is apparently also being factored in.
Layoffs resulting from job overlaps and cost-cutting objectives are more or less inevitable when major companies merge, and substantial cuts have been expected at WBD, given that its debt is expected to reach $45.7 billion this year, and its public cost-cutting target.
WBD has massive worldwide content assets, and CEO David Zaslav has stressed it will have a disciplined business model and content strategy based on return on investment and financial performance.
Nevertheless, integration — including the planned merger of the Discovery and HBO Max streaming services — will take time and investment, and the newly formed company now faces a shaky economic environment.
All entertainment companies already faced slowing streaming subscriptions growth rates due to increased competition and consumers’ return to normal activities as COVID restrictions have lifted. Inflation is likely to exacerbate that trend, as well as trim the robust advertising spending forecasters had originally projected for this year.
“There seems to be more downside than upside in the near term” for WBD, Yahoo’s Cristian Docan wrote in mid May. “Indeed, the massive debt amount of the combined entity, the integration process of the two entities and the unfavorable market conditions for highly leveraged companies should continue to pressure WBD stock.”