The National Geographic Society’s chief executive said Wednesday that the organization decided to enact a broad cost-cutting and layoff plan rather than wait until a company controlled by Rupert Murdoch took over its famous magazine and other media assets.
A day after dismissing about 180 employees and instituting other cuts, chief executive Gary Knell said the Washington-based organization decided to act now before Murdoch’s 21st Century Fox had to decide who would be dismissed when Fox completes a $725 million deal to expand a partnership with the society on Nov. 16. “I think we were able to offer a very generous severance package,” he said.
Under a deal announced in September, the nonprofit organization will effectively sell the magazine and its books, maps and digital properties to a partnership run by Fox, the owner of the Fox TV network and Fox movie studio. The society will continue as an educational charity but will retain 27 percent of the for-profit partnership, whose most valuable asset is the National Geographic cable TV channel. Fox has had majority control of the channel for 18 years.
While the deal will enrich the 127-year-old society — its endowment will grow to more than $1 billion with Fox’s money — the pain was evident Tuesday when employees waited to learn their fate. In addition to layoffs that amounted to 9 percent of the 2,000-member staff, an unspecified number will receive buyout offers.
Only four employees will lose their jobs at National Geographic magazine and its digital newsroom, said Declan Moore, a veteran National Geographic Society executive who will become chief executive of the Fox partnership, known as National Geographic Partners. But dozens more will be laid off in departments and services that Fox will provide to the partnership: legal, accounting, personnel and technology, among others.
By Wednesday, after the society’s workers met with personnel managers, discontent and disappointment rippled through the organization’s campuslike headquarters in downtown Washington. Those offered a buyout were given one week to decide, said one employee. “That’s not much time to get ducks in a row,” the employee said. “We’re all poring through [the offer] trying to make sense of it. There’s lots of head-shaking, for sure.”
The organization has imposed periodic cutbacks before — most notably the downsizing and eventual sale of its subscription-fulfillment operations in Gaithersburg in the mid-1990s — but an organization-wide layoff is unusual.
Instead, the society has been known as a paternalistic employer. Over the years, employees have enjoyed relatively generous salaries, with amenities such as a top-flight cafeteria and a headquarters museum. On Fridays during summer months, employees worked from home to reduce the organization’s carbon footprint.
Knell, who joined the National Geographic Society in 2013 after serving as NPR’s chief executive, suggested in an interview that digital “disruption” in the media business has made the old ways of doing business unsustainable.
“We’ve said, the truck was on the tracks and the train was approaching. Only now the train is coming faster.” Absent the deal with Fox, he said, “we were looking at millions of dollars in red ink in the future.”
After a strong 2013, the society began to hit some financial turbulence last year. Its revenue declined about 5 percent, to $500 million, and its operations swung from a surplus of $25.5 million to a $20 million loss. Net assets declined by $90 million, to $805.5 million, compared with a year earlier.
In addition to uncertainty over the media business, the society was facing growing debt payments and pension obligations (it said Tuesday it would freeze its pension plan for eligible employees). It was also facing tax obligations in 2017 with the exhaustion of various tax credits, Moore said.
Knell said the National Geographic Society intends to plow the cash derived from the Fox partnership into an array of scientific, educational and exploration projects. Between the income thrown off by its expanded endowment and the annual dividends from the partnership, he said the society will have an annual budget of about $150 million. He estimated that it would be the 25th-largest philanthropic organization in the world.
As for the partnership with Fox: “You can’t prejudge this,” he said. “If in two or three years, if we mess up the [National Geographic] brand, then people will judge us. But give us a chance.”