Endeavor makes another round of cuts as coronavirus squeezes Hollywood
Financial pressures on Endeavor appear to be mounting, as the Beverly Hills entertainment company announced an additional round of cost-cutting and layoffs in the wake of the coronavirus outbreak.
The company, which owns the William Morris Endeavor talent agency, said one-third of its workforce, or roughly 2,500 employees, will be affected by furloughs, have their positions eliminated, or be shifted from full-time to part-time work.
Previously, Endeavor announced it would lay off 250 people and cut salaries. The latest round factors in those layoffs and will include more job cuts. The company declined to provide further details.
“The long-term prospects for Endeavor remain unchanged, but like other companies, we are taking a variety of actions to mitigate the impact of this pandemic,” the company said in a statement.
The announcement is a further blow to Endeavor, which had planned to launch an IPO last year. Endeavor has been hurt by the cancellation and postponement of live events, which has devastated the entertainment industry.
Before the crisis hit, Endeavor had a heavy debt load. According to its SEC filing, last September, the company was carrying $4.6 billion debt on its books.
When Endeavor yanked its IPO on Thursday, the move marked a rare and humbling stumble for Hollywood power agent Ari Emanuel, and left questions about what’s next for his firm.
Last week, S&P Global downgraded Endeavor to a CCC+ credit rating from a B and said the outlook for the company is negative.
“Endeavor entered 2020 with a highly leveraged capital structure, therefore the anticipated significant drop in revenue in 2020 could potentially result in an unsustainable capital structure,” the S&P Global report said.
Endeavor said it has been rolling out the cost reductions since late March and expects to complete most of the process by mid-May.
In addition to the pandemic, major talent agencies, including WME, have been squeezed by a longstanding dispute with the Writers Guild of America over packaging and other industry practices. The union has instructed writers not work with talent agencies that have not signed deals with the WGA.
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