Vox Media, which owns titles including New York Magazine, Vulture, The Verge and SB Nation, is furloughing 9% of its employees without pay for a three-month period. It’s also taking other steps to cut costs during the COVID-19 downturn, including tiered salary reductions for remaining working staff and halting 401(k) matching contributions.
Effective May 1-July 31, about 9% of Vox Media’s employees — about 100 people — will be furloughed without work, CEO Jim Bankoff wrote in an internal memo, which was obtained by Variety.
“Today we are taking some of the most difficult and important cost reduction actions in our company’s history,” Bankoff wrote. “The expectations that we had just a few weeks ago for our business and our lives no longer apply.” He said he couldn’t predict the extent of Vox Media’s revenue drops but said those will be in “the tens of millions” of dollars. The company missed Q1 revenue targets by several million dollars and “the impact will be significantly greater in the second quarter,” Bankoff wrote.
A Vox Media spokesperson verified the authenticity of Bankoff’s memo but declined to comment further.
Last year, Vox Media acquired New York Media, publisher of New York Magazine, in an all-stock deal to boost their combined audience reach and gain some synergies of scale. The new company had about 1,200 employees, roughly 30% of them from New York Media.
New York-based Vox Media’s brands are Vox, New York Magazine, The Verge, The Cut, Eater, Vulture, The Strategist, Polygon, Intelligencer, Curbed, Grub Street and Recode.
Like other digital-media players, Vox Media has already encountered financial headwinds; two years ago, it laid off 5% of its workforce. But Bankoff wrote that the economic disruption from the COVID-19 pandemic “is clearly very different” in its scope and impact.
The company’s goals for cost cutting are to minimize cash burn “while attempting to limit the impact on our employees,” according to Bankoff’s memo.
Vox Media’s furloughs — and reduced work hours for certain employees — will disproportionately affect “areas where short-term demand will be lower,” according to Bankoff. Those include sales, sales support, production, events; editorial positions including at Curbed and SB Nation’s national sports coverage; and support functions like IT and office operations. All furloughed employees will continue to be covered under the company’s health insurance plan.
In addition, Vox Media is cutting salaries for employees who make $130,000 or more from May 1-July 31. Those who earn between $130,000-$199,999 will see a 15% pay reduction; those making $200,000 and over will have a 25% reduction. Bankoff said he and Vox Media president Pam Wasserstein will reduce their salaries by 50%.
The company also is freezing pay raises through the end of 2020 and halting its 401(k) matching program through the end of the year.
The WGA East-affiliated Vox Media Union, which reached a collective bargaining agreement with the company last year for 350-plus staffers, said in a statement that it disagreed with management’s decision to furlough employees “especially after hundreds of us told the company we were willing to take wider pay cuts to save all jobs” but added that Vox Media agreed to reduce the number of furloughs. The union also said it won guarantees from Vox Media for no layoffs, no additional furloughs, and no additional pay cuts through July 31, along with “enhanced severance for any layoffs that occur in August-December.”
Read Bankoff’s full memo sent Friday morning to company staff:
Subject: COVID-19 Impact and Actions: Important Employee Update
Today we are taking some of the most difficult and important cost reduction actions in our company’s history. I want to explain our decisions and the rationale behind them here as best I can.
Underlying everything I am about to lay out is the obvious and tragic fact that the world is experiencing a health and economic crisis unlike anything we’ve seen in our lifetimes. Because we operate in such a tumultuous industry, it’s tempting to lump in the economic carnage resulting from the COVID-19 pandemic with other events or crises that we’ve seen in the media business. This is clearly very different: while the severity of the pandemic’s effect varies across institutions and individual lives, it is universal, and no one is immune from its impact. Vox Media is no exception, but if we act swiftly, wisely and compassionately, we can increase the probability that we will be able to continue to build the strong company for which we are proud to work.
The expectations that we had just a few weeks ago for our business and our lives no longer apply. I’m confident that we will have a bright future, but only if we take action and adapt quickly to new circumstances. As I mentioned last week, we cannot continue with business as usual; we must focus our efforts and operate differently. This letter and this day are about communicating information regarding cost reductions and the impact on our employees. You should expect to hear more detail in subsequent forums about how we intend to re-prioritize to accelerate and invest in higher opportunity initiatives and de-prioritize others to adapt to our new reality. I referred to some of these priority areas in my last email; in the weeks ahead, you’ll see heightened accountability and communication from your leadership to that end.
As I previously shared, our goals for cost cutting are to minimize our cash burn while attempting to limit the impact on our employees, preventing disruption to core areas — notably our essential editorial work and our key business priorities — and positioning ourselves for renewed strength as we inevitably emerge from the downturn. The extent of our revenue declines are unforeseen, and I don’t want to speculate on their full severity since the range is wide, but we know they will be sizable, in the tens of millions. Seemingly each day, more concerning macroeconomic news presents itself. This week, we learned that retail sales have been hit by a “record-setting collapse.” This follows last week’s jobs report which signaled an “unprecedented economic collapse” (as well as this week’s) and the “seismic shock” the downturn is having on the ad market. While no one can predict when the downturn will abate, as I write this, the signs of a prolonged impact on our health, social norms and economy are gathering steam. We’ve already seen a decline in our business. Weakness in March, driven by the cancellations of SXSW and March Madness, the collapse of travel, sports and fashion-related advertising, and other factors led us to miss our revenue goals by several million dollars in the first quarter; the impact will be significantly greater in the second quarter. While expressing the severity of this decline, it’s also important to know that we will rebound. We don’t know when or to what extent a rebound will occur. I’d be overjoyed if it happened quickly, but we cannot bet our company on these hopes. So, we are striving to make the necessary adjustments to get through this period, recalibrate and emerge with relative strength.
When I say it’s our goal to limit the impact on our employees, I mean it. I and our leadership have run countless scenarios and assessed the potential consequences. Last week I outlined cost cuts that don’t have a direct impact on people’s salary and benefits. They are deep and larger in total dollar amount than the actions we are announcing today, but not enough on their own. As I’ve mentioned, we were patient and didn’t rush to make immediate changes, potentially losing some savings in the process, but also ensuring that we had more information to guide us. If it’s not already evident, we take these decisions with the utmost gravity. To that point, when we merged Vox Media and New York Media, I believe we were the only company in the recent spate of media mergers to not have layoffs or people-related cost reductions whatsoever. At the time, many in the press were skeptical or cynical about that decision, but we were able to make it work.
But now we face a new reality, precipitated by the pandemic. To achieve necessary cost savings given the data above, there will be consequences to people’s income and livelihood resulting from the actions we are implementing today. Everyone will feel the effect of the cost measures to some degree, but some considerably more than others. It’s our goal to treat those whose job status is impacted with the greatest possible care and support. It’s also important to note we were careful to analyze the outcome of these actions to ensure they do not disproportionately impact any underrepresented employee group. Here, I will outline our actions and supporting rationale:
- First, we will furlough and reduce hours for employees across our teams whose initiatives have been most negatively affected by the pandemic; where we were hardest hit by a loss of advertising revenue; or where we could find cost savings. Effective May 1 through July 31st, about 9% of our employees will be furloughed without work. Certain areas of the company are taking more furloughs than others. This is not a reflection of the quality of the work of those teams or individuals; these choices are driven by the impact of this crisis on certain parts of our business and on audience behavior, now and into the future. Areas disproportionately impacted include revenue areas where short term demand will be lower such as sales, sales support, production, events; editorial areas including SB Nation’s national sports coverage and Curbed; and support functions like IT and Office Operations that simply have less work for now as we virtually collaborate in isolation. Department leadership and People & Culture will have conversations with impacted employees this morning and early afternoon. All furloughed employees retain the company’s health insurance and the company will pay 100% of their health insurance premiums during the furlough period. We aligned the furlough period with the extended benefits of the CARES Act such that employees who collect state unemployment will also be able to receive the additional amount provided by the federal government.
- Second, we will reduce hours for about 1% of our employees, also from May 1-July 31st. Hours will be reduced by 50% or 75% for certain individuals, and the company will pay for 100% of their health insurance premiums during this time. Again, P&C Business Partners will provide details on all of this to impacted employees today, and we expect to have fully communicated to everyone by 4pm.
- Third, we will institute temporary and tiered salary reductions for employees with base salaries starting at $130,000, from May 1-July 31st. Employees who earn between $130,000 and $199,999 will take a 15% pay reduction. Employees making $200,000 and over will take a 25% reduction. Pam and I will reduce our salaries by 50%. Those impacted will see the first reduction in their May 21st paycheck (May 15th for members of the NewsGuild bargaining unit). We chose the $130,000 mark because it is the threshold for “highly compensated employees” for 2020 under the IRS guidelines. While everyone’s financial situation is unique, we wanted less relative impact on those who are below that threshold.
- Fourth, we will freeze wage increases through the end of 2020. We will reassess this decision at the end of the year.
- Finally, we will pause on our 401K match through the end of the year. You can still contribute pre-tax dollars to your 401K (without the match).
Some of you have asked if we could have avoided furloughs or layoffs by sharing deeper or longer salary cuts. The answer, unfortunately, is no. First, the math is such that the minimum amount of savings we need to make a dent in the revenue shortfall would not be meaningfully reduced with steeper cuts across earning levels or longer periods alone. Second, we want to be considered and strategic about where we are cutting costs. Across the board reductions that are blind to the realities of the pandemic’s specific effects on our business would only dig a deeper hole, forcing us to cut even more, and jeopardize areas that need relatively more investment during the crisis. Third, for those employees being furloughed, we wanted to ensure we prioritized funding healthcare coverage. Finally, in addition to not translating into a meaningful enough reduction, enacting more severe salary or benefits cuts for a longer period of time during this already stressful period is something we are trying to avoid in a prolonged crisis.
I’m giving this level of detail because I want you to have as much context as possible. I’m also hosting an all hands meeting at 4:30PM EST – you will receive an invite soon. You can submit your questions for that meeting here by 3PM EST. I will spend the majority of that time answering questions.
You should also know that while I am confident that we are making the right decisions for our company and employees given this unprecedented crisis, my confidence in no way softens the blow to the individuals most impacted, nor to the morale and feelings of all of us, who are upset because we care about our colleagues. I recognize the frustration, fear and uncertainty we all feel in this unprecedented situation. I thank everyone who has been patient while we analyzed these options, prepared for them and discussed them with our unions. Of course, I also thank you for the personal financial sacrifices you are making to help ensure that our company remains stable and secure into our strong future. While today is not the time and this note is not the place for cheerleading, I do want you to know that it is because of your work and the company and culture that we have built together, that we will successfully navigate through this crisis. We will emerge from these challenging times with our values, business and commitment to essential work intact, poised to lead well into the future.