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On Wednesday afternoon, Jeffrey Katzenberg donned a suit and tie and joined an emotional video conference with the staff of Quibi from his Bel Air home. Together with Quibi CEO Meg Whitman, he confirmed the news that had been swirling for the past few hours: Their 6-month-old mobile video service would be shutting down after struggling to attract an audience for its shortform entertainment programming.
Many Hollywood observers had been predicting Quibi’s demise since the moment Katzenberg first made his plans for the ambitious startup known, but that didn’t make the news any less surprising to the employees who had been in the trenches with him for the past two years, many of whom are fiercely loyal to the mogul and devoted to the business they helped to build. “This is not how they wanted it to go,” says a person who has done business with Quibi. Another knowledgeable source, who calls the shutdown “a shock for a lot of people,” describes it as a sad moment for the legions of hungry young Hollywood workers who took jobs at Quibi with ambitions to build the next big entertainment company.
“All we can do is own it,” Katzenberg said of Quibi’s sudden failure during a Thursday morning appearance on CNBC. “All of us expected a much better outcome, a much bigger outcome.”
Quibi will now wind down its operations with plans to shutter the service around Dec. 1 and return money to investors. Its demise means that some 250 Quibi employees will soon find themselves looking for new jobs at a moment of uncertainty in the industry, as several major studios reorganize and enact their own layoffs. What they are likely to find are opportunities that look starkly different than the ones they had at Quibi.
Though Katzenberg, 69, and Whitman, 64, have been the faces of the company, most of its employees are several decades younger. As of March, the average age of a Quibi employee was 30, a spokeswoman told THR at the time. The duo also recruited a workforce that was more diverse than many entertainment firms, with more than 46 percent of employees identifying as people of color.
Katzenberg built Quibi’s creative ranks by meeting with scores of ambitious young executives in 2018, back when the venture was still dubbed NewTV. Stories abound from that time about how he’d invite potential candidates to breakfast at Fairfax District eatery Jon and Vinny’s, which wasn’t far from where he was building Quibi’s future offices. Interviews would typically end with some version of the question, “Who is the smartest person you know?” Then, he’d ask for an introduction.
In a relatively short time, he recruited people away from Netflix, Lionsgate, NBCUniversal, Turner and Snapchat. They joined a roster of high-profile executives at Quibi, including CAA’s Jim Toth, Viacom’s Doug Herzog and former Hollywood Reporter-Billboard Media Group co-president and chief creative officer Janice Min, who departed before the service’s launch.
Quibi was always going to be a gamble. The company wanted to reinvent how people consume entertainment programming, asking them to pay as much as $8 per month for access to short, serialized stories that they could only view on their phones. Still, a source with knowledge of Quibi says people were willing to take a chance on the startup, which at that point had raised $1 billion in funding and counted every major studio in town as an investor, in exchange for the opportunity to get in on the ground floor of a new type of Hollywood firm. “Jeffrey went after top-performing executives and poached them,” the source says, adding that many who joined were excited by the prospect of making shows and building products freed from the bureaucracy found inside most big media organizations.
Over its two-year lifespan, Quibi made more than 100 shows with some of the biggest names in Hollywood, including Steven Soderbergh, Kevin Hart and Antoine Fuqua. Quibi quickly earned a reputation as a creative playground for its young executives, who would likely be several levels removed from the decision-making process inside a more traditional TV network or movie studio.
Though Katzenberg is known to be demanding, he also empowered his employees to take ownership over their work at Quibi, sources familiar with the company say, suggesting that the closely collaborative culture that he and Whitman created within Quibi’s ranks are a big reason why employees remained committed to the company as its prospects began to dim and it became the butt of Hollywood’s jokes.
Even in September, as reports began to swirl that Katzenberg and Whitman were exploring strategic options, including a sale, employees continued to operate as though it was business as usual, say several people with ties to Quibi. The only sign that something was afoot, according to two of those sources, was that Katzenberg — usually easily reached by phone or email — was less available than normal, which was not uncommon when he was out fundraising.
Quibi rank and file were caught off guard by the Wednesday news that the company would be shutting down, which many first learned about via reports in The Wall Street Journal and The Information, the sources with ties to Quibi note. Quibi has money in the bank and the assumption was that it would find a way to continue operating as it tried to enact a turnaround, those sources say.
Despite initial disappointment, employees have generally accepted that it’s time for the company to call it quits, says a Quibi insider. In the CNBC interview, Whitman confirmed that Quibi had cash left to spend but called pulling the plug on the business and returning money to shareholders “the honorable thing to do.” The decision also means that Quibi will be able to pay employees severance as they enter an uncertain job market, as WSJ first reported.
“Entertainment is not an industry you choose because it’s easy,” says a person with ties to Quibi. “There’s no straight line to success. You have to take risks.”
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