Editor’s Note: latest instalment of Internal Memos, from the front lines.
Believe it or not, despite all of the upheaval and uncertainty, the past few weeks have been the calm before the storm. There will be a massive period of disruption, dislocation, but also opportunity. We won’t control everything, but we are in control of our destiny.
The two epicenters of our universe, LA will be shut down for months, and NYC is under siege, with things getting worse before they get better. I know so many people in both cities, it’s literally like hearing of family and friends under attack. I hate watching it. I hate reading about it.
Perspective is Everything
Advertising, media, content seems on the one hand so unimportant, but as many of you have reached out to me privately (and which I appreciate), informing and entertaining fans, giving them an escape from the tough times ahead is actually a lot to be proud of. More than ever, our mission is meaningful.
The damage and destruction is only starting to be felt. If you see me trying to fire up the troops, mobilize everyone, break the mould and shake everyone up… please understand the context and backdrop.
Counting Our Blessings
We both face the single biggest threat in our existence, but also stand before the greatest opportunity of our times. How you each perform on every single play, in every single moment of every single day will determine where you stand when the dust settles. I can talk all of the motivational messages I want, but you are, in fact, more in control of your destiny than those who worked at Cirque du Soleil (95% let go), le Groupe CH aka Montreal Canadiens (60% let go), Just for Laughs & so many others in the media space in our city.
I promised we’d transparently discuss 1) physical well-being, 2) mental health and 3) financial strength, so this is an update on #3.
1. The hit to Google and FB is starting to become clearer
Between Google and Facebook alone, the two giants of digital media will lose (earn less in revenues) $44B (!)
The only “silver lining” – if we can call it that – is that the “Industry sectors leading the decline in U.S. ad spending for 2020 are travel, retail and auto, per the report.” We are not as exposed to those as others are. As mentioned in my Brave New World memo, everyone will be affected: some overnight and sudden, others over time. For more of my views on the impact to media and advertising, you can read my post here.
But the fact remains, if WatchMojo is the “house that YouTube built,” any hit to Google/YouTube will hurt us. But, we can’t complain about YouTube largesse in good times and then say “woe is me” when your benefactor gets hit.
2. Buzzfeed pay cuts but no layoffs (yet)
Buzzfeed has a larger business than ours by orders of magnitude, but as they’re not yet profitable, they have started to cut costs. NYC’s cost of living is twice Montreal’s, layoffs are that much more devastating there due to the cost of living, so this is actually (for them) a less destructive path to buffer themselves.
Memo: BuzzFeed announces graduated salary cuts in April and May, with staffers in the lowest bracket facing 5% cuts and executives taking 14% to 25% cuts
3. Gizmodo Media Group “brace for impact”
Gizmodo generates more revenue from direct sales, that will be hurt. So they are “bracing for impact.” Everyone is, as advertising has softened and will fall off a cliff on April 1, then flattened out before coming back, slowly, over the years. But long term, yes, this absolutely accelerates the shift to digital, eCommerce, online media… same way 2008 did so.
4. Disney took out a $6B line of credit, Discovery raised $500M in debt!
Two of the strongest media companies in the world have raised red flags to their investors, Disney is hit from all over (theme parks, cruises, theatrical releases), they have raised debt to weather the storm. It’s alarming. Thankfully, our theme parks or cruises have not been affected… because we have neither.
Discovery withdraws its previous outlook for FY 2020 and will borrow $500M to “increase its cash position and maximize flexibility” during the pandemic
5. Advertising Agencies starting to pare back personnel
As I’ve mentioned before, advertising is a variable cost that’s easy to cut back. Agencies have already started to reduce workload and personnel.
But, and yes, there’s always a but, the economy will go on, opportunities will be created, advertising will resume.
A weird dynamic will occur: less resources at agencies will lead to even more programmatic buying, but as traditional advertising messaging becomes thornier to navigate through in tough times, branded content and content marketing will become more important than ever. The storyteller, to quote Steve Jobs, will become the most important person of our generation.
This is a message of hope, not despair
Believe it or not, this is not a message of doom and gloom. In the past 15 years, I / we as a management team and all of us a united army have made decisions and viewed the world a certain way (i.e. what is scalable overnight is not sustainable, what is sustainable is never an overnight success) that some of you may not have understood, let alone agreed with. It’s fine, it’s water under the bridge. I gave up on wanting every single person to understand let alone agree.
As I have been throughout my life, and moreso now than ever, I am beyond confident in WatchMojo’s ability to be able to weather the storm, come out stronger – just as we did in 2008 and again in 2011 and oh yeah, again in 2017. However, in 2008 and 2011, we were fewer troops so it was easier to commandeer the forces, re-shuffle the front lines, re-positionsupply lines and so on.
This is why us crazy masochists do this, this is the fun times. We can do this, and we will do this, but I need everyone to be really, truly committed and focused. If everyone is on board and pushes back when they should and follow when they must– then everything, I think/hope (hey, we’re confident but not cocky 🙂 will be fine.
In 2017, when certain people weren’t on board, they didn’t constructively speak up, but they also didn’t in phalanx-like position, so we lost a lot of time and energy trying to get back in formation. This time, I don’t have any patience or desire to waste time. It’s war time. No one is asking you to stand in front, take incoming fire, but you are asked to be in formation.
If Le Cirque, JFL, and even Stanford and Harvard (despite endowments of $28 billion and $40 billion) decided that they needed to reduce their personnel to weather the storm, then there’s no expectation or responsibility for WatchMojo to do so if anyone doesn’t buy into this mission. We have paused hiring until the dust settles. But the reality is this is our time. This is our moment. Everyone will be scrambling, in survival mode. We have the terrain opening up. We can be proactive and go on the offensive. So, to some extent, you are in control of your destiny.
I said this to those who were in the war room post-Labor Day 2016, when we didn’t just “feel” the competition but felt it, saw others eating at our heels: we have always done better when we have been tested. Well, we’re going to be tested.
THE ECONOMY of MEDIA (aka general observation on how to interpret the news in our industry)
I think in some cases, like print media, they will simply use this knowing that like the 2008 shock, the “death of print” is accelerating. They will use Covid to do what was inevitable.
In other cases, like theatrical, there’s simply no revenue coming in, so employees are furloughed and that usually includes the top execs: AMC Theatres has furloughed 600+ employees at its Kansas headquarters, including CEO Adam Aron; staffers get reduced or no pay but keep health insurance access
But in their case, it’s not “a temporary” change… this will lead to what would have happened in 1-10 years, so they want to get ahead. Going to the movies will not go the way of dinosaurs, but that whole experience and business will change, ASAP.
We are in a unique, weird position: short term pain, long term gain…
The purpose of my emails are to say that despite being blessed and having had the foresight to have invested in people, products, processes and platforms to be able to operate somewhat smoothly when these unforeseen shocks occur, we are not out of the woods… and that there’s opportunity, if we have the right outlook and stay positive, but realistic. It’s about balance – always.
The best is always yet to come, but if I seem kinda more gung ho, all guns blazing, firing up the troops, y’all need to get the stakes. These are not normal times.