New from KimMasters: High-flying Endeavor brought down to Earth by virus and debt
As layoffs commence and CEO Ari Emanuel forgoes 2020 pay, insiders question how backer Silver Lake will react after a failed IPO and a heavy-borrowing growth strategy put a 7,500-person company in a position"where things had to go great," writes Hollywood Reporter editor at large.
Even as the entire entertainment industry suffers greatly amid closed movie theaters and a shutdown of production, Endeavor stands exceptionally exposed. With aof $4.6 billion, the key question is what its biggest backer and majority owner, Silver Lake Partners, will do to address the crisis.
Whether Emanuel, 58, deserves that confidence is a matter of debate; while no one suggests he could have anticipated this disaster, some contend that his company’s aggressive acquisitions left debt-laden Endeavor especially ill-prepared to weather a storm. The company was already under pressure after a planned IPO failed last fall.from Emanuel that there would be more measures “beginning this week and through the month of April” that would affect both jobs and pay.
Certainly there was skepticism. "There's no question that people were saying, `What is your vision here?'" says a former studio chief. And Endeavor also had gone into debt for assets that relied on live events that — again, as no one could have predicted — would become profoundly vulnerable to the economic ravages of the coronavirus pandemic.
Asked how he evaluates Emanuel’s position now, one veteran studio executive replies, "That there was a natural disaster — you can’t blame him for that. You can blame him for putting himself in a position where things had to go great."
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