Last week, company executives sent e-mails to newsroom and other company staff announcing a 5 percent reduction in Sinclair’s workforce. The company has more than 9,200 employees, and a reduction of that size would see pink slips issued to more than 450 workers by the time the dust settles.
The layoffs come after Sinclair announced last December that it would implement a wage freeze for all employees, including its executives. The wage freeze took effect at the start of this year, but just before it did, Sinclair quietly promoted 11 executives with pay increases.
The layoffs are expected to roll out in a phased manner over the next few weeks, though some employees have already been given pink slips, including a dozen television and radio workers at Sinclair’s broadcast outlets in Seattle and Portland.
In a company-wide e-mail obtained by The Desk, Sinclair’s chief executive Christopher Ripley said revenue shortfalls caused by the ongoing coronavirus health pandemic were to blame for the decision to lay off workers.
“From local businesses and advertisers to distributors and partners, no component of our business’s ecosystem has been fully shielded from the impact of the global pandemic,” Ripley said, adding that affected workers would receive a severance package.
The coronavirus health crisis struck during an election year when local television stations typically see a boon in advertising revenue as candidates and causes duke it out over the airwaves. But the gains from political advertising were severely offset as businesses pulled back their marketing dollars or shifted advertising budgets as they tried to stem pandemic-related revenue losses of their own.
Sinclair was not alone in its struggles last year: Comcast, the Walt Disney Company, Fox Corporation, ViacomCBS and others also saw a significant dip in revenue due to the health crisis, though some of their economic woes were also attributed to a decline in other business sectors, including the inability to operate theme parks or release feature films in theaters.
Sinclair might have been in a better position to weather the effects of the pandemic had it not made a poor bet on sports just beforehand: The company spent around $10 billion to acquire nearly two dozen regional Fox Sports-branded cable channels from Disney just a few months before the health crisis hit.
Sinclair believes it would recoup that money over the long term through a combination of carriage deals with pay TV companies and advertising revenue against different games carried on the networks. Then the pandemic hit, putting a screeching halt to sports in progress and casting severe doubt on the ability for other leagues to start their seasons on time.
To make matters worse, some pay TV distributors decided to stop carrying the regional Fox Sports channels, starting with satellite broadcaster Dish Network mere weeks after Sinclair closed on the deal. Fubo TV, Hulu with Live TV and YouTube TV followed suit shortly thereafter. Last November, Sinclair announced it lost $3.2 billion over a three-month period, largely attributing the issue to a lack of sports during the pandemic.