So far no agents have lost their jobs as a result of the pandemic that has brought the entertainment industry to a near-halt, but a source tells THR that "every option is on the table right now," including paycuts, layoffs and furloughs, and that because Endeavor has such diverse business holdings, decisions would be made for each unit individually but likely impact everyone in the company in some way.
To wit, Emanuel and executive chairman Patrick Whitesell are forgoing the remainder of their 2020 salaries. Under the terms of their current contracts, they were set to receive a base salary of $4 million each with an annual bonus of up to $6 million and $2 million, respectively.
The moves come five days after WME partners were told Friday that the expected buyback of their equity shares, planned for April 5, was postponed indefinitely. It's a double disappointment for these senior agents, who had already seen a promised windfall fall through last September when Endeavor pulled its planned IPO at the last minute.
While no entertainment company is immune to the novel coronavirus pandemic's economic impact, Endeavor, with a $4 billion-plus debt burden and massive investment in live events businesses, has been especially vulnerable.
All agencies are feeling the effects -- at least 100 Paradigm employees have been let go, including several senior talent agents, and those remaining at the company are taking pay cuts of up to 50%, while UTA's Jeremy Zimmer, David Kramer and Jay Sures are forgoing their 2020 salaries -- but over the years WME has become just a slice of Endeavor's overall media strategy. Starting with its $2.4 billion acquisition of IMG in 2014, the company has steadily added more and more live event franchises to its portfolio, including the Miss Universe Organization, Professional Bull Riders and, most expensively, UFC for $4 billion in 2016.
Now, with the status of public gatherings around the country questionable at best or outright banned or cancelled in certain regions, Endeavor faces the grim task of shedding more weight than its peers as the industry enters lean times. What's more, its explosive growth in the past decade was funded in large part by leveraged finance that now leaves the company in more than $4.6 billion debt to majority owner Silver Lake Partners and other private equity investors.
Such a high-risk, high-return strategy was to pay off last fall, when Endeavor planned to become Hollywood's first company with a talent agency to go public. But amid doubt over its ability to achieve its $8 billion target valuation, the company changed course on the eve of its intended IPO. The bottom dropping out of the live events market as a result of a global pandemic, although completely unforeseeable, leaves Endeavor in even more of a precarious position with its creditors.
Emanuel's memo to the company is below.
I don’t think any of us could have imagined we’d be in the place we are today.
As we all focus inward to protect our personal health and safeguard our families, every company around the world is simultaneously faced with safeguarding the health and future of its business. We are no different. All parts of our company are feeling the effects.
With that in mind, we are in the process of assessing our operations globally to develop a plan that will protect the business while limiting the impact on as many employees as possible. In addition to the cost-cutting efforts outlined a few weeks ago, we will be implementing a number of additional measures beginning this week and through April that will affect compensation and some jobs across the company. The effects on each business will vary, and you will receive more specifics from your respective leaders, to the extent any of these decisions may impact you. As part of this, Patrick and I will not be taking a salary for the remainder of 2020.
These decisions are not being made lightly, knowing the impact they may have on you and your families during these uncertain times.
We appreciate the strength and compassion that you continue to show for one another as we navigate this challenging situation.
This article was originally published by The Hollywood Reporter.