Discovery Commits $40M-$60M for Employee Buyouts
Discovery Communications said in a Securities and Exchange Commission filing late Wednesday that it has committed between $40 million and $60 million to an employee buyout aimed at streamlining the programmer and helping it invest in growth initiatives including digital services and content creation.
According to the 8-K filing, typically made by public companies to announce a material event, Discovery identified eligible employees on April 28 and began offering the buyouts on May 4.
The company did not disclose how many employees are eligible for the buyout and how many it believes will take the offers.
Discovery said it also is looking for other ways to cut costs and is investigating “additional actions to reduce its non-personnel costs and is continuing to evaluate its overall expense base,” according to the filing.
In a memo from Discovery CEO David Zaslav that was included in the public filing, the moves are part of the company's ongoing strategic planning.
"We are rolling out a number of cost-reduction efforts around the globe, including budget reallocations, technical and process improvements and organizational restructuring, all designed to make us more competitive and ensure that we can continue investing in new growth initiatives," Zaslav said in the memo. "The specifics of the cost reductions will vary across business units and geographies, and you will hear from your leadership team in the days and weeks ahead. There is no doubt that change can be challenging and difficult. This process, while necessary, is a tough one. In making these hard decisions, we are positioning Discovery for many more years of success and growth as a leader in global entertainment."
Zaslav continued that the ultimate goal is to maximize the company’s linear TV business while pursuing other opportunities like launching new digital and mobile offerings.
"The cost savings will allow us to continue growing our business while investing in four key areas: more loved content; sports and other valuable IP; digital services and OTT products; and international growth markets,” Zaslav said in the memo.
The announcement comes the day before Discovery is scheduled to release its first quarter earnings results. In the memo Zaslav said the company is strong – ad sales and international affiliate revenue are healthy.
“All the success we have today has been driven by embracing change and disrupting ourselves in the past,” he said in the memo. “I am confident that these cost-reduction measures will both amplify our current strengths and pave a clear path for continued growth and success… Together, we can embrace the change, lead the disruption and continue transforming our company for the future.”
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