Yahoo Finance ‘A time of crisis’: Here's what you need to know about the Bell Canada layoffs
BCE Inc. announced major layoffs at Bell Canada on Thursday following the release of its 2023 fourth quarter and full year earnings results. The move is expected to save the company $150 million to $200 million in 2024 and $250 million per year thereafter. The Financial Post’s Denise Paglinawan and Shantaé Campbell explain what you need to know about BCE’s big cut.
How big are the layoffs?
BCE, with a workforce of around 44,610 individuals, is poised to reduce its employee count by nine per cent, amounting to approximately 4,800 positions. The majority of the lost jobs will take place within Bell Canada, with under 10 per cent coming from the Bell Media division.
In an open letter signed by BCE chief executive Mirko Bibic, the company said it would leverage vacancies and natural attrition to mitigate the necessity for layoffs to the greatest extent possibly.
The cut represents the most substantial reduction in headcount at BCE in nearly 30 years and is the second significant round of layoffs at the media and telecommunications conglomerate since last spring. The first round led to the reduction of six per cent of Bell Media positions were axed, and nine radio stations underwent closure or were divested.
Which businesses do the layoffs affect?
According to Bibic, BCE will enact workforce reductions across all levels of the company. However, the specific positions slated for elimination remain undisclosed.
In an internal memo, Bell Media informed staff it is ending multiple television newscasts and making other programming cuts.
CTV News and BNN Bloomberg are affected. Three evening programs on CTV News Channel — The Debate, This Hour and Top 3 Tonight — will end and be replaced by a four-hour news broadcast on weeknights beginning at 6 p.m.
What is happening to the radio stations?
The company also plans to sell 45 of its 103 regional radio stations. The stations set for closure include 21 in British Columbia, 12 in Ontario, seven in Quebec and five in Atlantic Canada.
“That’s a significant divestiture. It’s because it’s not a viable business anymore,” Bell chief legal and regulatory officer Robert Malcolmson told The Canadian Press in an interview. “We will continue to operate ones that are viable, but this is a business that is going in the wrong direction.”
In an internal communication, Bell Media president Sean Cohan disclosed the company’s plan to sell the radio stations to seven buyers: Vista Radio, Whiteoaks, Durham Radio, My Broadcasting Corp., ZoomerMedia, Arsenal Media and Maritime Broadcasting. These transactions are contingent upon approval from the CRTC and fulfillment of other closing conditions.
The correspondence further details BCE’s plan to retain the divested stations on its iHeartRadio Canada platform post-transaction, assuring, “for those employees directly impacted, please know that the stations remain on air and it is business as usual.”
As of right now, the fate of those stations is unclear if the sale is blocked.
Why is this happening now?
Bibic blamed the federal government for being slow to deliver aid to media enterprises, citing the Canadian Radio-television and Telecommunications Commission (CRTC) for its sluggish response to what he called “a time of crisis.”
This encompasses two legislative initiatives aimed at bolstering Canada’s beleaguered media industry: Bill C-18, colloquially referred to as the Online News Act, designed to mandate compensation from tech behemoths to Canadian news providers for their content; and Bill C-11, which modernizes the Broadcasting Act, obligating digital platforms to advance Canadian content.
“We continue to face a difficult economy and government and regulatory decisions that undermine investment in our networks, fail to support our media business in a time of crisis and fail to level the playing field with global tech giants,” Bibic said.
He said Bell Canada expects to lose over $250 million in legacy phone revenues every year. Bell Media’s advertising revenues declined by $140 million in 2023 and the unit continues to incur more than $40 million in annual operating losses despite having the most-watched network of local TV stations.
What does Bay Street think?
BCE still raised its dividend following the fourth quarter earnings, but the 3.1 per cent hike was below the normal five-per-cent-plus range. While the restructuring aims to yield savings this year and in future years, the associated costs of the downsizing are projected to reach $400 million.
In a note to clients, Desjardins analyst Jérome Dubreuil said that BCE ultimately met the lower end of guidance after consistently lagging throughout the year. But it’s guidance disappointed due to reduced free cash flow projections. BCE expects that revenue will only grow slightly in 2024 and that earnings per share will decline.
• Email: dpaglinawan@postmedia.com
• Email: shcampbell@postmedia.com
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