FOXA Fox Corporation

By Joe Flint and Keach Hagey 

21st Century Fox is offering buyouts at its film studio and television networks group in an attempt to cut $250 million in expenses in the next fiscal year, according to a person familiar with the matter.

The voluntary buyout plans were announced to staff in memos sent out Monday.

"Our industry is changing rapidly, presenting new challenges and even more opportunities at every turn," wrote Peter Rice, the chief executive of Fox Networks Group, in a memo to staff. "To ensure we make the most of this new world, we need to adjust, adapt, and organize for the future. With this in mind, through the remainder of this fiscal year, we will be undertaking some structural changes, increasing investment in some parts of the company while making cost reductions in other areas."

Jim Gianopulos, CEO of the Twentieth Century Fox film studio, sent a similar memo to his staff, saying that the studio was "reviewing our organizational structure and looking at potential cost reductions to position us for sustained growth." He added that "colleagues who have extended tenure" will be offered "an enhanced benefit package if they elect to voluntarily resign form the company effective at the end of May 2016."

Despite new breakaway hits like "Empire," the Fox broadcast network has struggled in the ratings with the aging of "American Idol" and has been a drag on its parent company's financial results in recent years.

A year ago, 21st Century Fox lowered its earnings forecast for fiscal years 2015 and 2016, citing continued struggles at the broadcast network among the reasons. Last fiscal year, which ended June 30, 2015, the company's television division suffered an 8% drop in revenue and a 19% decline in operating income.

But Mr. Rice acknowledged in the memo to staff that the buyouts come on the heels of some recent successes for the network, which he said "may be confusing." Sunday night's performance of "Grease: Live!" on Fox averaged 12.2 million viewers and last week's premiere of the "X-Files" reboot scored huge global ratings.

"It is important, however, that we organize ourselves for tomorrow rather than resting on the laurels of today, and the best time to do that is when we are in a position of strength," Mr. Rice said.

Fox shares have fallen 18% in the past 12 months amid industrywide fears about the rise of cord-cutting among consumers. Fox shares were up less than 1% to $27.12 as of Monday afternoon.

For the year ended June 30, 2015, Fox's filmed entertainment segment suffered a 2% decline in revenue, though operating income increased 6%.

Fox's cuts to its film division come as many Hollywood studios have had to shrink their staffs in recent years, particularly because of plummeting DVD sales, which were once a major source of a movie's revenue.

For the entire company, operating expenses amounted to $18.6 billion in the most recent fiscal year, and the company had 20,500 full-time employees as of June, according to regulatory filings.

21st Century Fox and Wall Street Journal-owner News Corp were part of the same company until mid-2013.

Write to Joe Flint at joe.flint@wsj.com and Keach Hagey at keach.hagey@wsj.com

(END) Dow Jones Newswires

February 01, 2016 16:05 ET (21:05 GMT)

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