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AT&T’s Otter Media Lays Off 10% of Staff, Will Absorb Machinima in Reorg

Otter Media, the digital-media company owned by AT&T, is undergoing a broad restructuring resulting in the layoff of about 10% of employees across the organization, Variety has learned.

In addition, AT&T’s WarnerMedia is moving Machinima — the gamer and fandom digital property that has been part of Warner Bros. Digital Networks — under Otter Media, starting in January 2019. Otter houses businesses including Rooster Teeth, focused on sci-fi and anime-style content; Fullscreen, focused on branded content and influencer marketing; and the Ellation subscription VOD business unit.

Among its changes, Otter is consolidating its direct-to-consumer businesses, moving Rooster Teeth under the oversight of Ellation CEO Tom Pickett, who also oversees the Crunchyroll anime and VRV services. Otter Media also will Fullscreen to operate in three divisions — creator services, brand studio, and brand services — and wind down the Fullscreen Direct direct-to-fan digital management business.

“These changes will make our business more focused, competitive and profitable,” Otter Media CEO Tony Goncalves wrote in a memo to staffers announcing the reorganization. “As a result of these changes, we’ve had to make some difficult decisions related to the size of our organization and have to say goodbye to some valued colleagues.”

Otter Media has nearly 1,400 employees total (excluding Machinima), according to a source familiar with the company. The cuts come as part of the overall reorg, with some positions being eliminated because of redundant functions. Machinima had about 100 staffers as of earlier this year, after its workforce had been trimmed in previous years.

“Otter Media completed a long-planned reorganization today to make our business more focused, profitable, and ultimately better positioned to harness the opportunities in the dynamic digital media landscape,” a spokeswoman said in an emailed statement.

Sources said the job cuts are mostly companywide, spanning all of Otter’s divisions, but that the Ellation group was spared from layoffs. As part of the restructuring, Otter Media is consolidating shared functions across legal, HR and finance.

Otter Media is shuttering the Fullscreen Direct service, which came from Fullscreen’s 2016 acquisition of startup StageBloc. The service has 75 clients and Otter will share “transition plans” for Fullscreen Direct soon, according to Goncalves’ memo.

Fullscreen’s three division heads will report into Andy Forssell, Otter Media’s COO. The creator services team is led by Beau Bryant; the brand studio (influencer marketing and custom content) is headed by Maureen Polo; and brand services (social creative and video-channel management) is led by John Holdridge. Fullscreen founder and CEO George Strompolos officially exited in September.

Goncalves, along with outlining the restructuring and staff cuts, touted that Otter had “invested heavily in our businesses” over the past year. “We acquired companies, established two new studios and launched a gaming division at Crunchyroll, set the foundation for increased programming quality at Rooster Teeth, and elevated our tech platforms and data capabilities,” he wrote in the memo. “All this during a period of significant change, including our acquisition by WarnerMedia earlier this year.”

AT&T acquired control of Otter Media this summer, buying out Chernin Group’s majority stake in the venture in a deal reportedly valued at $1 billion. Chernin Group and AT&T had formed the JV in 2014. Goncalves, the former DirecTV exec who was appointed Otter Media’s CEO earlier this year, reports to WarnerMedia CEO John Stankey.

It’s the latest shakeup in the telco’s media unit, which is gearing up to launch a three-tiered entertainment streaming VOD service in late 2019.

Under AT&T’s ownership, WarnerMedia has shut down FilmStruck, from Turner and Warner Bros. Digital Networks, and WBDN’s DramaFever. In addition, Turner also shuttered its Super Deluxe edgy digital studio in October.

Pictured above: Otter Media CEO Tony Goncalves

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