TV Globo: even with billions in cash, the broadcaster loses and lays off

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Last Thursday (8), two of Globo’s most experienced journalists, Alberto Gaspar and Ari Peixoto, were fired. Gaspar, who was a reporter and international correspondent, had worked at the station for 39 years. Peixoto, who held the same functions, had been with Globo since 1987.

The cuts are part of another wave of layoffs by the station to reduce costs. In the first six months of this year, Globo has already cut R$ 281 million in salaries.

The change began in 2019, with the Uma Só Globo project. The restructuring plan merged five companies into one, eliminated positions and reduced expenses. However, despite the big cuts, Globo has been losing money. It closed the first half of this year with R$ 144 million in red. The number represents a deterioration of 122% compared to 2020, when the company had a loss of R$ 51 million in the same period.

it won’t go broke

But Globo is far from being a company on the brink of bankruptcy, as its detractors like to imagine. Despite the losses and a slight drop of 3% in cash compared to 2020, Globo still has R$ 12.5 billion available in its accounts. That’s enough to go on for a long time.

The problem is that we still see Globo as an unshakable giant. The biggest communication company in Latin America and one of the biggest TVs in the world. But that means less and less in a world where traditional media shrinks, TVs lose relevance to streaming, and advertising shifts to digital.

In the golden age, Globo’s main competitors were SBT, Record and Band. Today, Globo competes for the attention of Brazilians with Google, Facebook, Amazon, Apple, Netflix, games and all kinds of technology companies. Globo’s R$12.5 billion cash is respectable, but it says more about the past than about the future.

Apple’s cash is over R$1 trillion. That’s right, trillion. Google’s, more than R$750 billion. Netflix, after more than a decade of losses and which only started to make a profit last year, has more than R$ 44 billion available in its bank accounts. On a global scale and in an increasingly digital world, our Brazilian giant is a runt.

The successive cuts in employees, reductions in salaries and departures of stars at Globo point to a company whose best days are in the past. The speech is cutting to invest in digital. But the reality is that it is necessary to cut to survive.

A company in crisis

To outsiders, Globo’s attitudes seem petty. But those inside are watching a kind of slow and steady decline of a company that loses relevance. In this context, making decisions becomes increasingly difficult.

If Globo’s best days are behind us, it is natural that the priorities and attitudes of executives end up in increasingly desperate attempts to find a way out, which explains the apparent chaos in some of the company’s decisions.

The signs are clear. For example, the basics of the HR manual is to make one-time cuts as quickly as possible. But for three years now, the station has been carrying out layoffs uninterruptedly within days. Globo dreams of being Netflix, but behaves like Blockbuster.

Even the attempt to compete on digital seems increasingly like a discourse disconnected from reality. Can Globoplay go head-to-head with Netflix and other technology giants when it becomes more and more a platform to sell to its biggest competitors? Disney+ and Apple TV+ would take years to gain the subscribers that Globoplay delivered by closing the partnership with the two competitors.

Globo itself highlighted these partnerships with competitors as a relevant source of revenue from the reporting platform for the market.

David vs. Goliath

Globo, unlike other Brazilian broadcasters, chose to fight on two fronts. On the one hand, it combats the natural decline of broadcast and cable TV. On the other hand, it tries to win the streaming war with huge investments in Globoplay. Films and series, after football, are already Globo’s biggest costs and help explain the loss in the first half.

But Globoplay continues to grow, and streaming is the future. It is true. But does Globoplay make a profit? Is it viable as a competitor to the largest technology companies in the world? And especially, on the day it makes (if it does) profit, will it be enough to keep Globo at the same level of relevance as in the past?

Ingrid and Lázaro towards streaming

The departure of Ingrid Guimarães, Lázaro Ramos and so many stars to Prime Video and other streaming services gives indications of where TV viewers are betting. If you are a Globo star and see the company break with colleagues with decades of career without much ceremony, is this the company for you to bet on your professional future? If Globo didn’t even agree to negotiate with Faustão, the greatest presenter on Brazilian TV, what are the chances of any other talent in the house having a salary discussion or a divergent view of the direction?

About Globo’s plan to be a media tech, can you imagine a programmer or employee in the technology area, disputed by large multinationals or promising startups, refusing job offers to stay at Globo?

By betting all its chips on digital, Globo runs the risk of getting stuck in the middle of the road and suffering a creative blackout by not retaining its stars from the content who feel discredited. It may not yet be able to attract great talent in the technology area. Now, even traditional TV customers like Magazine Luiza, with its new content and advertising area, have become competitors.

For those who are in the daily life of Globo, an existential ghost haunts every decision. This explains why a 26-year-old product like Malhação enters the network’s plans and suddenly disappears.

Decline of an icon

For outsiders, a new cut or a layoff at Globo seems petty. For those inside, it’s part of other signs of decline.

Gradually, Globo seems to become one of those soap opera characters who were a millionaire, but after losing his fortune, he is forced to live on the periphery and try to maintain the habits and discourse of the heydays. The result is chaotic and caricature. The exit of icons, successive cuts of employees, the discourse of digitization (sorry, media tech) and the constant twists are part of this plot.

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