Some media companies, no strangers to mass layoffs in the face of unstable funding models, are approaching the economic uncertainty caused by the coronavirus differently, AdWeek reports. Instead of adding to the layoffs that have seemed to hit consistently since the 2008 financial crisis, publishers are opting to scale back employees’ pay this time around—at least so far.
iHeartMedia, Entercom, Beasley Media, Gannett and others have cut the salaries of their staff as a way, they say, to avoid more layoffs. Other publishers, from national outlets to niche publications, are likely to offer something similar.
It’s a move to apply pressure to the gaping wound the coronavirus has left in the entire supply chain of media economics: If companies aren’t making products because they’re closed, they’re not able to sell products, which means they can’t market or advertise any products.
The media industry’s efforts to diversify how it makes money beyond advertising, such as events for example, have also been impacted. Business experts who spoke with Adweek said the temporary cost-saving moves are measures that can preserve staff morale and keep the businesses running so when people can physically gather again, and marketing budgets are restored, publishers’ businesses will be able to handle the demand.
In other words, they’re hopeful that business will resume as quickly as it dried up.
The pandemic serves as a “short-term shock,” said Joseph Foudy, clinical associate professor of economics at NYU Stern School of Business. Unlike a recession, there could be a turnaround in months, not necessarily years. “If the recovery comes sooner than expected, they could find that it’s difficult to regrow,” Foudy said. “It would be really inefficient to lay people off.”
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