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Amid a broader economic downturn, Endeavor — the parent company of assets like agencies WME and IMG, sports league UFC, events firm On Location and online gambling platform OpenBet — is pausing new hires through the end of the year.
Speaking to The Hollywood Reporter by phone while attending an RBC Capital Markets investor event, Endeavor president Mark Shapiro said that the firm will put in place a hiring freeze until 2023 but noted that the Beverly Hills-based conglomerate will be backfilling positions. The Endeavor executive emphasized that no broader cost-cutting would be instituted and travel/expenses, bonuses and spending would not be subject to review at this time for the company’s roughly 8,000 employees.
“The state of the business is strong, but we have to be responsible given the time of the year and the national economic environment,” Shapiro told THR.
The Endeavor exec stressed that the move was being made from a position of strength, as the firm — unlike other Hollywood giants — has been insulated from economic headwinds like those impacting advertising-reliant companies. And the time frame for the hiring pause, as the holiday season approaches, arrives at a typically slower cycle for major agencies, which tend to mostly close up shop in the last couple weeks of the year.
“We need to really be prudent, we’re in — or walking in — to a recession,” Shapiro said about the hiring freeze during a panel moderated by RBC’s Kutgun Maral. “There’s a lot of fear out there, there’s a lot of fearmongerers. And we just need to keep a lean cost-structure, frankly. As tight as we can have it. And hiring over the holidays does no good, you’re just giving them vacation anyway.”
Shapiro added during the panel that, “at a time like this of uncertainty, we need to be conserving cash and just working on the balance sheet.” The Endeavor exec forecast that the focus in 2023 would be more free cash flow — a profit metric showing an ability to fund operations without outside financing — and expanding margins in each business unit.
But the hiring freeze does arrive as Warner Bros. Discovery, Disney, Paramount, NBCUniversal and others are instituting belt-tightening measures, including cutting back on spending and staff reductions. Disney CEO Bob Chapek warned in a memo to staff on Nov. 11 of “limiting headcount additions through a targeted hiring freeze” while layoffs have been ongoing at the David Zaslav-run Warner Bros. Discovery, impacting multiple divisions including CNN, whose chief, Chris Licht, forecast in late October that restructuring will “accelerate” and will result in layoffs and budget cuts.
On Nov. 10, Endeavor disclosed its third-quarter earnings, with its WME and IMG representation unit seeing revenue fall year-over-year to $388 million from $664 million — due to the sale of 80 percent of Endeavor Content to South Korea’s CJ ENM as part of a deal with the Writers Guild — even as the core agency business made strides. Meanwhile, the company’s owned sports properties, like UFC, saw revenue gain from $288.5 million a year ago to $402 million in the third quarter this year and its events unit stayed about even year-over-year with $440 million in revenue for the frame.
Overall, citing foreign exchange rate changes, Endeavor posted a loss for the quarter of $12.5 million compared to a gain of $63.6 million in the same time frame in 2021. During an earnings call, Endeavor chief Ari Emanuel noted “our business continues to perform well despite the macro headwinds,” and touted comedy bookings as well as growth in music touring, experiences and demand to attend live events.
“Spending habits have shifted, but our company has a presence at every point on the purchase chain,” Emanuel added. “During COVID people were buying stuff, and post-COVID, they are more focused on experiences, and we are the benefit of that side of the equation.”
Since Jan. 3, the first day of trading this year, stock in Endeavor has fallen about 34 percent, from 34.81 a share to 22.92, while the New York Stock Exchange Composite Index has dropped about 10 percent.
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