New York(CNN Business) Vox Media, owner of sites including Vox, The Verge and New York magazine, is furloughing about 9% of its employees for three months. The decision is one of several measures the digital media company announced Friday to cut costs after the coronavirus pandemic decimated its revenue sources.
The furloughs, which will run from May 1 to July 31, affect multiple departments including sales, events, production, IT, operations and editorial. Vox Media currently employs about 1,200 people, resulting in about 100 people facing three-month furloughs. In addition, about 1% of the company's personnel will have reduced hours for the same time period. Vox Media will continue to cover the health benefits of those affected.
Vox Media CEO Jim Bankoff announced the changes on Friday in a memo to staff that was obtained by CNN Business.
"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," Bankoff said.
Vox Media and New York Media —which the former acquired last year — are both unionized, which means management is required to negotiate with each bargaining committee on any changes in employment status. One of the protections management agreed to in negotiations includes no further furloughs, layoffs or pay cuts until July 31, according to two sources.
Bankoff said he and president Pam Wasserstein will take 50% pay reductions. Vox Media will also implement a tiered salary reduction. Staffers making $130,000 to $200,000 will see their pay reduced by 15% while those whose salaries are more than $200,000 will have a 25% pay reduction. The company also will suspend 401K matching for all employees through the rest of this year.
The pandemic has prompted media companies to make up for the loss of advertising revenue with furloughs, pay cuts and layoffs as brands across many industries slash marketing and advertising budgets and eliminate discretionary spending. BuzzFeed, for example, implemented tiered pay reduction across the company. G/O Media, whose titles include Gizmodo and Deadspin, and Group Nine Media, which owns NowThis and The Dodo, laid off approximately 60 employees in total. Some local newspapers and alt-weeklies suspended print editions and furloughed employees, hoping that they will one day be able to rehire them.
Bankoff said Vox missed its "revenue goals by several million dollars in the first quarter" citing factors such as the "cancellations of SXSW and March Madness, the collapse of travel, sports and fashion-related advertising."
"[T]he impact will be significantly greater in the second quarter," he warned.
Vox Media reported a profit last year. In September, the company acquired New York Media, which includes the namesake biweekly print magazine and the websites The Cut, Grub Street, Intelligencer, The Strategist and Vulture.
New York Media's union criticized the plan saying "we believe management's insistence on specific furloughs falls far short of what Vox Media's CEO, Jim Bankoff, has described as a 'shared sacrifice.'"
Vox Media's union wanted Bankoff to take a 100% pay cut and proposed that more Vox Media employees take salary reductions in order to avoid furloughs and layoffs. This cost-cutting plan is similar to that of BuzzFeed's, in which CEO Jonah Peretti announced he would forgo a salary and the majority of employees had their pay cut.
"We fought hard and in many ways to try to prevent these furloughs," Vox Media union told CNN Business in a statement. "Our members were willing to take wider pay cuts. And we urged the CEO to take no salary or, as an alternative, to take the salary of our lowest-paid member."
Bankoff acknowledged these discussions in his memo to staff.
"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," Bankoff said.
The union tweeted that it also secured "enhanced severance" for any layoffs through the rest of the year. The company also would cover the full cost of health insurance for furloughed employees.