Illustration: Jim Cooke

This is the story of how corporate raiding, complacency, excess, and incompetence are gutting a media company that matters to tens of millions of people. It’s not a novel story, and perhaps not even scandalous by the standards of corporate opulence: A shark-obsessed boss, millions wasted on consultants, and an executive who insisted on publishing softcore porn are more embarrassing buffoonery than insidious greed. The main problem—the billions in debt the company ran up in the process of its owners buying it and weighing it down—is practically routine in media and beyond; that doesn’t make it any less infuriating.

This company is Univision, which until recently obligingly filled the role of absentee stepfather to Gizmodo Media Group, our employer. Now, Univision’s business is struggling, and GMG has suddenly found itself under a very watchful eye.

Once upon a time, Univision, an American broadcasting operation aimed primarily at Spanish speakers in the United States, was a tremendous golden goose laying tremendous golden eggs: It made incredible amounts of money and had to do essentially nothing for it other than run programming produced by Televisa, a Mexican broadcasting operation. The fairy tale ended long ago. Univision has been in decline for years, thanks to a disastrous private equity buyout finalized in 2007; an aging audience; a burdensome program-licensing deal with Televisa; competition from Telemundo and Netflix; layers of overpaid and useless middle management; and a general failure to position itself for a digital future.

No one at Univision, from working journalists to officers of the company to investors looking for a return, wanted anything other than for the company to thrive and become a behemoth for the ages, a legacy operation that would show the way forward for media in a changing America. That didn’t matter. We recently spoke to more than two dozen current and former Univision employees from every level of the company, private equity experts, and management consultants, and reviewed a wide range of documents, and the picture that emerged is clear: Despite the debt hanging over Univision’s head, the company indulged a culture of complacency and excess, embodied in many ways by the operations of Fusion Media Group, an ill-fated attempt to stay relevant in the digital age. And now that the ship is off course, the rival interests in the company are at each other’s throats, in some cases diving off the ship and in some cases teaming up to force enemies off the gangplank. The first few months of this year have seen severe and ongoing cuts, the replacement of the chief financial officer, and the announcement that chief executive officer Randy Falco—who in a recent company-wide email announcing layoffs was reduced to describing them as “disruption ... required to transform this business into a company that will not only exist but continue to thrive”—will retire by December.

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From routine human resources fuckups to vastly overselling the prospects of an IPO whose ultimate doom this March precipitated the company’s current cost-cutting spree, Univision has been deeply mismanaged and is in the midst of making huge cuts that have, among other things, already claimed vast swaths of Univision Noticias—the most vital newsgathering operation serving the Spanish-speaking community in the U.S.—and Fusion Media Group. Consultants from Boston Consulting Group, who have reportedly recommended budget cuts of up to 35 percent in some parts of the company, have been combing through the books for months, and more than 150 people have been laid off so far. Plenty more cuts are pending (Univision president of news Daniel Coronell reportedly described them as “catastrophic” to his newsroom), including at GMG, the staff of which fears the newsroom may be cut by up to a third by the end of June, perhaps as part of a broader pivot toward video and branded content. What is happening to the company is not ultimately a failure of editorial or even executive management, though: If Univision was a mammoth whose failure to adapt slowed it down, it was private equity investors, consumed by the thought of turning their riches into more riches, who brought it down and bled it dry.

“A symbol of the excesses of the credit bubble”

While there had been plenty of signs that something was amiss, the first hint that something was seriously wrong came buried at the end of a March all-staff email opaquely titled “Finance Update and Appointment | Información y nombramiento en Finanzas.” The email informed staffers that chief financial officer Frank Lopez-Balboa was departing the company. News that Univision was scrapping its long-held plans for an IPO was slipped in at the very end.

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“Given that we are no longer on a path to pursue a public offering, this is an opportunity for Frank to begin the next chapter of his career,” Randy Falco wrote in the message.

The pursuit of a public offering failed due to a combination of antsy investors, new competition, and a private equity deal that the Financial Times would later describe as “a symbol of the excesses of the credit bubble.” That last bit is the most important.

In 2007, a consortium including Texas Pacific Group, Thomas H. Lee, Madison Dearborn, Providence Equity, and Saban Capital took Univision private for $13.7 billion. These firms—executives of which still shape Univision’s board—borrowed heavily to finance the deal, saddling their new prize with more than $10 billion of debt. According to an FCC filing, each firm holds between 20.6 and 7.1 percent of Univision’s equity, and between 27.3 and zero percent of the voting interests. Thomas H. Lee, the only firm with no voting rights, has no official members on Univision’s board, but two of THL’s employees, James Carlisle and Laura Grattan, are listed as Univision board observers in their company bios; Univision would not say if the firm had appointed members to the board or who they were. Univision, for its part, declined to answer questions about the board, while all the involved firms either declined to comment or did not respond to questions about their involvement with Univision.

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Leveraged buyouts such as the ones by which these companies acquired control of Univision were common in the years leading up to the financial crisis: Investors borrow a huge amount of money to purchase a company and then make that company responsible for paying back the debt. The amount of borrowing required is often large relative to a company’s earnings. This relationship—known as leverage—is used to gauge whether a company is likely to be able to pay back its lenders. The financial world commonly measures this through the ratio of “debt to EBITDA,” or earnings before interest, taxes, and depreciation and amortization of various assets. (The finance industry’s inscrutable jargon is a feature, not a bug. Just think of this ratio as a company’s debt compared to how much money it makes each year.)

Univision’s ratio, estimated at 12.5-to-1, made it highly leveraged even by the standards of the pre-crisis boom period. (In 2013, Obama administration regulators would urge banks to limit companies’ leverage to roughly half this level to reduce the risk of default.) Still, in 2007—when the company maintained a tight grip on the then-swelling U.S. market for Spanish-language media, and before media enterprises came to be viewed as dead investments—Univision found itself in a position of relative strength.

“There is a term that investors like to use: ‘growing into your capital structure,’” said Jack Kranefuss, a senior director at Fitch Ratings who analyzes the media business. “You start off with too much debt, but you have a company that has good growth prospects. Univision, for the longest time, was thought of as a company that could grow into its capital structure.”

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Univision CEO Randy Falco speaks in Beverly Hills in February 2018.
Photo: Getty Images

Private equity firms typically cash out their investments after a few years, and Univision’s backers have been looking for an exit since at least 2014, when they held preliminary negotiations with CBS and Time Warner to sell the company for a reported asking price of more than $20 billion. Those talks soon collapsed. The following year, Univision positioned itself for an initial public offering just before media company stocks began tumbling amid fears that cord-cutting would threaten the traditional TV business. Top Univision brass continued postponing IPO plans in the hope that market conditions would improve, attempting to reorient the company toward an increasingly bilingual Latinx media market while simultaneously trying to exit their positions. They couldn’t pull it off. They were reportedly close to a $13 billion merger with Discovery Communications, which would have represented a clean exit for Univision investors, but rejected it. The delayed IPO piqued the interest of Liberty Media’s John Malone, but Univision reportedly could not agree with him on the company’s valuation. Eventually the board abandoned their IPO plans altogether earlier this year.

This brings us to that March email to all Univision employees, whom Falco thanked for their “commitment to our company, our networks and our community.”

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“Anyone who saw that email knew shit was about to hit the fan,” a current Fusion staffer told GMG. Sure enough, two weeks later the Wall Street Journal reported that Univision’s Fusion Media Group—a unit including the Fusion cable channel, its associated digital assets, Gizmodo Media Group, and the Onion properties—faced budget cuts as high as 35 percent, and that a number of the company’s top executives, including Felipe Holguín, chief executive of Fusion Media Group, and Daniel Eilemberg, chief content officer of Fusion TV, had departed, having been forced out in what was essentially a palace coup. (Holguín declined to comment; Eilemberg could not be reached.) The significance wasn’t so much in the news itself (Fusion, despite its lofty goals, was never the most important part of the Univision empire) as in the abruptness with which an experiment whose rise and fall indexed its parent company’s broader aspirations was abandoned.

“There were teams that had to work on shark stuff.”

Launched in 2013, Fusion was the brainchild of Isaac Lee, currently chief content officer of both Univision and Televisa; Lee was hired in 2010 by Haim Saban, the soon-to-be-former Power Rangers mogul and a Democratic donor, and came to oversee an ever-expanding portfolio. Fusion, targeted at Latinx millennials, was Univision’s first English-language TV channel. Initially a joint venture with ABC, Fusion aimed to solve Univision’s fundamental problem, which was and is that its main business is airing Spanish-language TV shows for an aging audience that has increasing access to other, better programming through streaming platforms.

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With a cash infusion from Disney, additional financing from Univision, and tens of millions in cable carriage fees scheduled to come in, Fusion was set, even if it reportedly lost $35 million in 2014, its first year in business. Part of its ambitious if incoherent plan to appeal to everyone Univision did not—multicultural millennials and cord-cutters prime among them—involved an expansion into digital publishing.

“Essentially, that was the strategy: We’ll take this guaranteed money that’s coming in the door, hire a bunch of really good people, and use them to build something that can compete with the Voxes and the BuzzFeeds of the world,” a former Fusion digital employee said.

In a few short years, the well-funded project would become one of the most spectacular digital media failures in recent memory.

Fusion hired big names from digital, print, and television—infamously, it reportedly paid financial journalist Felix Salmon, who came on proclaiming that he would be “post-text,” more than $400,000 a year to do, as far as anyone could tell, nothing in particular—as well as a thick layer of “friends of Isaac Lee” known internally as FOILs. Felipe Holguín and Daniel Eilemberg were prime examples, but Lee has a long history of keeping it in the family. Back in 2008, according to a FOIL, when Lee was running a local magazine called Poder in Miami, he helped out a friend from the business community (he dubbed her his “fairy godmother”) by hiring her son as an intern after he graduated college. That same intern was then hired at the Univision network a month after Lee was, and eventually came to Fusion TV, too.

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At the working level, a lack of clear editorial vision left employees adrift. Relentless pivots meant that people hired to do one job were often given different assignments within a matter of months, ending up working on projects that didn’t align with their experience; meanwhile, executives seemed far more focused on creating the narrative of a fast-growing media company than on what that media company was actually producing.

“We didn’t know how our projects were helping the company or how they were being monetized,” one Fusion TV employee said.

For years, money flowed into a series of pet projects—this U.S.-Mexico border concert is a typical example—favored by executives and FOILs, while editorial staffers were left confused about the value of the stories they were pushed to pursue and wondering about the long-term viability of a company spending huge amounts of money without doing much the public seemed especially interested in. (As far as anyone could tell, practically no one watched the Fusion channel.)

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One often-mocked example was Project Earth, Fusion TV’s environmental unit. Headed by Nico Ibargüen, an environmentalist and FOIL in top standing, it produced so much content about sharks that it became not just an internal joke but a subject of outside coverage. “There were teams that had to work on shark stuff,” a former Fusion staffer said. “It was, ‘[Nico] is a genius and therefore we must make shark content because he wants it.’ ”

Fusion’s problems weren’t a matter of mismanagement alone: Isaac Lee may have run it as his own personal fiefdom, directing resources to his pet projects and those of his cronies, but that wasn’t the fundamental problem. Even perfect execution might not have made the concept work. Its digital offerings launched at the height of Facebook’s dominance over the media industry, into a crowded marketplace where even sites with clear voices would have had difficulty standing out. Some of Fusion’s biggest-budget Facebook pushes struggled to gain the following necessary to organically propel the new publication to the top of the News Feed—something that led to a new focus on viral-friendly video and, according to a source with direct knowledge, seven-figure sums spent on simply buying traffic.

“The first thing I remember feeling is, ‘I just have to go out and do really good journalism that’s going to impress people and make a name for this place,’” a former Fusion digital staffer said. “Later there was traffic pressure and then I think the mission sort of changed at some point into: We’re going to be the super-woke millennial-focused media outlet.” Writers brought on with a mandate to chase important stories faced pressure from an audience development team that repackaged stories for virality, sometimes in cringeworthy, decidedly un-woke ways:

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Although Fusion was co-launched with Disney, that company sold its stake to Univision in April 2016—something framed internally as a positive move that would allow reporters to pursue more controversial work, even if it more realistically involved the world’s most successful media company cutting its losses. Univision soon acquired Gawker Media Group and wrapped the former Gawker sites into its portfolio, and just days after the presidential election, which had already set the company’s workforce on edge, Fusion was hit with heavy cuts. In 2017, Fusion TV executives laid claim to Fusion.net, which had been the home of Fusion’s digital content since the site’s inception and had earlier that year become the flagship news site for the newly rebranded Gizmodo Media Group. This site grab came because, staffers were told, TV executives were angry that the site was more closely associated with what was running online than with their TV productions. The Fusion digital team was directed to brainstorm a new name for their publication, and, in July 2017, the site was renamed Splinter.

After the recent cuts, not only is Isaac Lee’s play at digital empire-building seemingly derailed—his lieutenants have been dismissed, and his biggest public move this year has been having dinner with Jared Kushner—but Fusion Media Group, as an entity distinct from GMG and the Onion sites, seems barely to exist.

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“Isaac is the best deal maker I’ve ever seen in media. He’s one of those people on Craigslist who starts with a paperclip and somehow barters his way to a whole house,” said Alexis Madrigal, who joined Fusion in 2014 and worked as the company’s editor-in-chief before departing in 2017. “He started with almost nothing on the Univision digital side and created this massive set of digital media companies using whatever resources he could. But I think it made it very difficult to create an operational digital media company because it was such an assemblage of deals, not an organically grown entity.”

“As we reshape our business, we will identify efficiencies and savings opportunities.”

The lukewarm response to Univision’s attempts to sell or go public over the years can largely be attributed to the long-term debt its owners burdened it with in the first place. Univision has shrunk that pot from more than $10 billion in 2007 to just under $8 billion today, according to its most recent year-end report. But that debt is still far more than the amount of money Univision makes each year—roughly six times the size of the company’s EBITDA. That’s about one-third higher than the levels seen at Sinclair Broadcast Group and Netflix in 2017, according to Fitch, and more than double that of AMC Networks. The ratings agency Moody’s said in a 2017 report that Univision’s debt has junk-bond status.

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What’s more, interest payments on debt still eat up a sizable chunk of Univision’s earnings. Without such payments, the company would have been safely profitable since 2012. Univision financial reports show interest expenses totaled $442 million in 2017 alone; over the past three years, they’ve amounted to $1.46 billion. These payments came in addition to tens of millions in fees paid to Univision’s private equity investors over the years, as required by “management and technical assistance agreements” that the company finally terminated in 2015 with a lump-sum payment of more than $112 million.

Graphic: Data via CapitalIQ

Strategic missteps have compounded these financial pressures. In 2010, as the financial crisis was cratering the ad market, Univision sold a stake of the company to Televisa, its programming supplier, which had unsuccessfully bid to purchase Univision four years earlier. The $1.2 billion deal not only provided Univision a lifeline to help make its debt payments, but extended an agreement for Univision to continue broadcasting Televisa’s programming—most importantly, its then-popular telenovelas. In return, Univision would fork over a healthy cut of its Spanish-language media revenue.

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“The impact of Univision now having more exploitable content than ever before, both through our in-house efforts and from our expanded programming agreement with our most important partner, Televisa, cannot be underestimated,” Univision president and chief executive Joe Uva said at the time.

In retrospect, it was a drastic miscalculation. While Univision has paid Televisa about $300 million in licensing fees in each of the past three years, the telenovelas that are the core of its content have flopped among younger viewers, with Univision’s primetime ratings dropping precipitously as a result. Telemundo, its main competitor, has eaten up market share with more Americanized shows, such as series about Mexican drug lords. (Televisa has reportedly been tepid about this change in demand, in part due to its close ties to the Mexican government.) Meanwhile, Netflix and other streaming services have continued to eat away at the cable subscriptions that translate into carriage fees paid to broadcasters. For its part, Univision says it still sees the relationship as fruitful. A spokeswoman said, “Televisa is an important partner and we’re pleased with their continued efforts to evolve their content pipeline to meet the needs of Hispanic audiences in the U.S. The refreshed content pipeline has resonated with our audiences and has allowed us to regain our significant lead as the top U.S. Spanish-language network.”

All of this points to 2018 being a rough year for Univision, which brings in about $3 billion in annual revenue. Its content-licensing agreement with Televisa got even more expensive in December 2017, potentially adding more than $100 million in costs per year; the ad market is already facing industry-wide headwinds; and Telemundo is not only increasingly attractive to advertisers, but it also outbid Univision for the rights to broadcast this year’s World Cup. (Univision financial statements suggest programming around the tournament brought it $120 million in revenue in 2014.)

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This is what led Univision brass to see the need to frantically cut a reported $200 million—or $300 million, per another report—in costs. (Univision has declined to comment on the size of the cuts.)

“As the media industry continues to evolve, change is no longer optional for our company, it is imperative,” Randy Falco said in his end-of-year earnings call in 2017. “2018 is about continuing to transform our company for the future. As we reshape our business, we will identify efficiencies and savings opportunities in the areas that require change and we will reinvest for growth.”

“It’s what connects you to the community.”

If knifing Fusion Media Group represented the board cutting off a hand, the layoffs that came next were a thrust aimed at the heart: Univision’s news operation, the reporters and programming most directly connected to the American Spanish-speaking audience.

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“At the end of the day,” as one Univision insider said of the company, “it’s a network that airs Mexican TV shows. It’s a tube from Mexico to the U.S.”

Much of what makes Univision more than a television tunnel is its acclaimed Noticias division. (In 2017, a glowing story by New York Times media critic Jim Rutenberg described Noticias as “one of the most striking examples I’ve seen all year of a news organization that is meeting the moment.”) Noticias addresses an audience of more than 50 million Spanish speakers in the United States, a population vastly underserved by the mainstream media. While Jorge Ramos deservedly serves as the face of the division, and of Univision, there is more to what Noticias does than what appears on TVs across the country: According to a ComScore analysis, Univision’s news traffic beat out that of several other leading Spanish-language digital news sources—Telemundo.com, Yahoo.ES, and CNN Español—fairly handily. Univision’s news site drew between 2 and 3 million unique visitors per month between March 2017 and March 2018, according to ComScore data, a vast reach in relative if not absolute terms.

Noticias’ work is critical, and hardly going unnoticed. This year, the Univision Noticias digital news team won a Premio Ortega y Gasset de Periodismo for its “Mejor Vete, Cristina” podcast, and first place at the NPPA Best of Photojournalism awards for its multimedia report “A Night Bearing Witness to the Violence of El Salvador.” Just last month, Noticias won a Hillman Prize, given to “journalists who pursue investigative reporting and deep storytelling in service of the common good,” for its work on a multimedia project called “From Migrants to Refugees: The New Plight of Central Americans.” In an internal email sent April 2017, Randy Falco boasted about the prize: “[T]he project epitomizes Univision at its best,” he wrote.

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What he didn’t mention was that in that same month nearly 35 percent of a staff of 85 people was cut from Noticias’ digital branch. (Univision declined to comment of the size of the cuts.)

Noticias digital—which since 2010 was part of Isaac Lee’s portfolio—began staffing up in earnest after Borja Echevarría was hired in 2014 to lead the digital news operation. Rutenberg’s Times story quoted Univision president of news Daniel Coronell summing up the role of Univision Noticias for the U.S. Latinx population: “We are the voice of the voiceless people … probably the most weak members of this important country.” Coronell was more recently quoted as telling his newsroom that the cuts that took place there and the ones slated to come are “catastrophic.”

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With these deep cuts, Univision’s voice—the work of journalists who in many cases were forced to flee countries like Venezuela, Mexico, and Guatemala, where they were persecuted for their reporting—has been muted. In the Miami office, where the newsroom is based, morale is dragging. Staffers, some hired less than two years ago, are confused about why these cuts are happening right now; some in the U.S. on work visas are scrambling to find ways to stay in the country legally. Two newsroom sources say that reporters and supervisors cooperated and in some cases even sacrificed their jobs to ensure that reporters facing unstable or unsafe conditions in their home countries, like Venezuela, could keep their jobs and stay in the U.S.

The value of Univision Noticias digital—a news site investigating and reporting in practical ways on topics that are literally life or death for millions of people in this country—can’t be measured in money alone. As the Times wrote, “One of [Univision’s] most shared digital features this year has been an explainer on the papers that documented and undocumented immigrants should always have on them, in case of immigration raids or stops.” As one person at Univision said, “Noticias is the core. It’s the lifestream, it’s Jorge Ramos, it’s what connects you to the community.”

With nearly 35 percent of the digital news staff gone and layoffs pending on the TV side, it’s obvious that highers-up don’t value that core as much as they once did.

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“There are definitely some headwinds.”

All of the cuts seem to point back to debt. Indebted companies typically have agreements with lenders that establish leverage maximums. (In Univision’s case, its debt cannot be more than 8.5 times the size of its EBITDA.) If a company passes an agreed-upon threshold or misses an interest payment, “creditors can potentially accelerate the payments on that debt,” said Patrice Cucinello, director of the media and entertainment group at Fitch. A company could then risk default if it doesn’t have the cash on hand to make its lenders whole.

This isn’t a danger for Univision right now, because it has managed to increase its revenue: “At least from our financial model,” Cucinello said, “I’m not seeing a near-term risk of default.” The possibility that Univision could default on its debt, though, explains a great deal about the company’s priorities. Univision has reduced its leverage over the years through billions in quarterly payments, and Cucinello pegs its current ratio of debt to EBITDA at around 6.3-to-1 by Fitch’s model. It’s an improvement, she said, but still as much as double the level seen at some comparable media companies. One bad year could gravely change the company’s outlook.

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For Thomas H. Lee Partners, one of the five private equity firms in the consortium that bought Univision in 2007, this story of leverage is familiar. Thomas H. Lee’s portfolio also includes iHeartMedia (formerly Clear Channel), the country’s largest radio broadcaster, which has swum in as much as $20 billion in debt since a leveraged buyout in 2008. iHeartMedia had weaker-than-expected results in recent quarters and missed an interest payment earlier this year, declaring bankruptcy in March. While iHeartMedia was forced to lay off dozens of employees across the country in several rounds of layoffs, Thomas H. Lee was reportedly expected to break even on the deal, having bought some of iHeartMedia’s debt at a discounted rate—surely a point of pride for the firm.

Univision’s debt load is nowhere near that of iHeartMedia’s before its bankruptcy—about 12 times EBITDA, per Fitch—but Univision’s remains stubbornly high compared to the company’s often volatile earnings. IPOs are typically seen as avenues to deleverage indebted companies, an option now off the table for Univision. Coupled with the loss of market share to Telemundo and the lack of World Cup programming this year, Cucinello added, “there are definitely some headwinds as the company heads further into 2018.”

Isaac Lee in August 2014.
Photo: Getty Images

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This is the context within which the board’s decisions should be understood. With the prospect of increasing revenues seemingly off the table as a mechanism for deleveraging, slashing costs was the remaining alternative. For investors to extricate themselves from the company, the board would need to drastically prune Univision to spruce it up for potential buyers. The conditions of Univision’s acquisition created a logic by which the company had to attack itself in order to escape its debt.

In the aftermath of the failed IPO, conflict grew on the board over how this attack would be carried out; that conflict’s precise nature remains frustratingly opaque. Reports have put the estimated total cuts the board looks to make at $200 million (or more); the company has disputed this estimate but has not asked the publications reporting it for corrections or clarified what the target is. Univision declined to answer questions about the budget cuts. In one version of the story, management decided to bring in BCG to help trim the budgets of underperforming units. In another version of the story, Isaac Lee and Haim Saban advocated cutting as much of this amount as possible from the corporate side of the company, which one FOIL characterized as armies of managers making seven-figure salaries in do-nothing jobs, rather than from Lee’s own fiefdom. (Lee declined to comment; Saban could not be reached.) Lee’s and Saban’s enemies, meanwhile—among them, supposedly, Thomas H. Lee Partners, rattled by the iHeartMedia bankruptcy—took the cost-cutting exercise as an opportunity to, among other things, destroy Lee’s power base, which, if it contained plenty of waste and bloat, also contained the newsgathering and digital operations that were the most vital and forward-looking parts of the company.

In this reading, Univision journalism was essentially collateral damage in a conflict between a set of bloodsucking capitalists and a would-be empire builder protecting small armies of loyalists. However you read it, Lee lost out: Fusion Media Group and Noticias were gutted, FOILs like Eilemberg and Holguín were turfed out, and rumors spread in the company that Lee’s power had diminished to the point where he didn’t have so much as an assistant to book his flights. If not actually true (Univision would not answer specific questions about the board’s operations, though it says Lee does have an assistant)—Lee remains chief of content for both Televisa and Univision, after all—the fact that such rumors rippled, and were believed, still said something about the force and speed of Lee’s fall, and the unraveling of Fusion Media Group, which functionally exists in name only.

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“It’s power with no responsibility.”

To make their cuts, Univision’s board hired Boston Consulting Group in December. It’s common enough for media companies to hire consultants to evaluate their businesses and workflows, typically in preparation for budget cuts. In 2017, a reported two dozen analysts from McKinsey & Company helped Time Inc. slash hundreds of millions in costs as it transitioned to new ownership. Condé Nast, meanwhile, brought in FTI Consulting in 2015 and McKinsey in 2009.

“There’s like 10 reasons to hire a consultant, and only one of them is that they’ll tell you something you wouldn’t know,” said Duff McDonald, author of the 2013 history of McKinsey, The Firm. The other nine? “To help you get a decision by your board. To help you get a decision by your employees. If you’re going to make a public announcement, it helps to have the cover … It’s typically an exercise with a preordained conclusion.” (Sources familiar with Univision’s situation said they heard that cuts of 30 to 40 percent were on the table before BCG was brought on, and that the consultants acted according to instructions management gave them. Univision declined to answer specific questions about the time frame for the budget cut decisions.)

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McKinsey works under strict nondisclosure agreements with its clients, McDonald added, and consultants at other firms reached by GMG said that they do the same. “They sell the credit for their ideas,” McDonald said. “They take no credit publicly. But they also accept no blame. It’s power with no responsibility.”

While it’s unclear how much Univision is paying BCG for its services, the cost for such a long-term consulting engagement runs well into the millions. McKinsey charges clients flat fees, McDonald said, adding, “They don’t really play small ball.”

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With Lee defenestrated, the board has trained its eye on the parts of the company he oversaw, and on lower-level employees there. While the company spends millions on consultants, Fusion TV is essentially extinct and Univision digital has been slashed despite overriding wisdom that says digital media is the future for the flailing giant. Univision news still faces cuts, as does GMG. Perhaps you’re curious what’s going to happen to us in light of all this; we are as well. Sameer Deen, head of digital for Univision, who has been acting in place of Felipe Holguín as Fusion Media Group’s CEO and is thus in charge of GMG, has said in meetings with reporters, editors, and union officials that “changes” could come to GMG in late June, after the consultants have time to complete a review. He has repeatedly declined to specify what they may look like.

“Thriving”

There is nothing like Gizmodo Media Group on the internet. While that’s mainly a function of what we do—publish true and interesting things that others can’t or won’t—it’s also a function of what we don’t do. GMG doesn’t find itself forced to deny that it is acting to defraud advertisers. GMG’s bread and butter has never been quirky listicles, nonsensical quizzes, and cynical plays at gaming social algorithms. GMG never embraced a distribution strategy that left it at the mercy of merciless platforms like Facebook. GMG isn’t reliant on sponsored content disguised as news. GMG doesn’t use unpaid and underpaid labor to prop up our entire business model.

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What GMG does do is draw a large and growing audience for its journalism—according to ComScore, it drew 58 million unique U.S. visitors this March—and make money off it. (Revenues are believed within GMG to have been up by a double-digit percentage last year; Univision declined to comment.) It is lean—GMG’s staff of about 200 pales in comparison to other digital media staffs—and, according to a statement Univision issued in response to questions from GMG, “thriving.” BuzzFeed’s news division alone is about 300 people, and that doesn’t include BuzzFeed entertainment and BuzzFeed media brands, which include the likes of Tasty and Nifty. BuzzFeed’s total staff is roughly 1,700 people.

Not only is GMG lean, but it is in an increasingly strong position relative to competitors, in part because of its relative lack of reliance on Facebook. According to ComScore, Buzzfeed’s U.S. unique visitors were at 67 million this March, down nearly 20 percent from March 2017; GMG traffic is up by a third over the same period. Why, then, is the company facing deep cuts? An answer has never quite been given, but according to Univision, while GMG—whose predecessor, Gawker Media, was characterized upon its acquisition in August 2016 as a “consistent, compelling and profitable digital media business” in a company-wide email signed by Isaac Lee—may be thriving, it did not turn a profit last year.

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Citing various reasons, Univision has declined to share any internal numbers. It’s therefore unclear how large the losses were or what might have caused them. How much those losses have to do with the intricacies of corporate accounting, or with GMG having been made to integrate with Fusion digital’s struggling and top-heavy video operation, whose leadership has since been cleared out, is unknown. The question of profitability is, in some ways, a red herring. The corporate priority for GMG in 2017 was rapid expansion—though what that scale would look like was never quite defined to the newsroom—clearly tied to hopes of a capital raise.

(A Univision spokeswoman declined to comment on whether GMG met the goals Univision set for it in 2017 and whether its revenues were up. Univision chief revenue officer Tonia O’Connor was not made available for an interview.)

Univision bought Gawker Media in 2016 with the intent of expanding its reach into English-language digital media ahead of its planned IPO, but didn’t appear to understand the company it bought. It still seems not to. To GMG staffers, the clearest sign of this is probably just that Deen is now in charge of the operation. His conversations with staffers have, they say, showed no apparent familiarity with what GMG does or how it works, or with the distinction between business and editorial. He also has little in the way of a relevant background. Before joining Univision in 2015, he worked in “corporate development” and “multiplatform distribution and strategy” for Scripps; since, he has overseen Univision properties which between them do about a tenth the collective traffic of GMG sites, according to a ComScore analysis. Not only does nothing about this suggest readiness to take over a major digital property, but one anecdote relayed by various sources reveals startlingly poor judgment.

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Univision Deportes’ website has an entire section devoted to what is essentially softcore porn, offering laughably thin connections to sports as pretexts for running it. This very horny section, called “Sensación,” features a wide array of photo galleries, the subjects of which range from male athletes’ girlfriends dressed in skimpy clothing to male athletes’ wives dressed in skimpy clothing to certain sports teams’ fans who just happen to be women dressed in skimpy clothing. This post, which is typical, consists of 26 photos of a Liverpool fan, each with the same vapid caption about how star player Mo Salah owes her a championship.

After digital editors decided to stop running these posts for four months in 2017 because they weren’t consistent with the organization’s journalistic standards, Deen decided, we are told, that the bikini-clad women had to return because traffic had dropped too much without them. It should be noted that these posts aren’t even especially popular—according to Chartbeat data, posts tagged Sensación Deporte accounted for 176,861 page views in April, whereas the overall total for posts tagged Deportes was 7,470,423. (Univision declined to comment on Sensación; Deen did not respond to a request for comment.)

No one at GMG labors under the delusion that Deen is the real power here; any potential “changes” seem likely to play out as they did at Univision digital, where editors decided who to let go after being told how much of their budget they needed to cut, with the nature of those cuts decided ultimately by some opaque combination of the board and the consultants the board has hired. Still, Deen’s leading role in the decision-making process about cuts and the future of the enterprise—a process in which O’Connor and GMG editors will also take part—does not inspire confidence in the staff. And the fact that Univision is considering cuts at all infuriates GMG staff because the company is healthy and successful.

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While Univision has invested in GMG, the company’s success is in many ways despite Univision, not because of it. GMG employees have described nightmare scenarios in which they had to fight to get their newborn babies on their healthcare plans or haggle for months to enroll in other basic benefits. One employee became suddenly ill shortly after being hired, and the company failed to provide interim healthcare coverage while the employee waited to receive their health insurance card. Last month, a day before the national tax deadline, employees received an email from human resources director Brian Ford, who had recently been hired to fix chronic HR problems, warning them that there had been “an error in the reporting of your Roth contributions on your 2017 W2 Form” and that employees would have to refile their taxes. Shortly after that, the company failed to pay employees promised performance bonuses on time, apparently because of a clerical error. And for many staffers, an under-resourced newsroom is not a looming prospect but a present reality: Due to recent austerity measures, one GMG site had to put two job offers it had already made on hold, and another functioned without an official editor-in-chief for nearly half a year before pressure from the union helped force a promotion.

“Growth is only one component.”

The fate of GMG now rests in the hands of Univision, an indulgently run and suicidally structured company. In turn, Univision’s fate rests in the hands of impatient private equity vampires who are not concerned with the long-term damage to revenue streams that could result from slashed budgets, or with damage to the company’s connection with tens of millions of Spanish speakers—or with journalism, or with anything, as far as anyone can tell—but with their desire to get out of a bad deal with as little damage as possible. This is their right; the people who work for Univision and its subsidiaries are simply unlucky enough to be employed under an economic system that considers the livelihoods of thousands to be less valuable than the panic and avarice of a few fathomlessly wealthy people.

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There is no clear way forward for media organizations today, even ones with large audiences and sustainable business models. Google and Facebook have solidified their stranglehold on digital advertising, and even the deep-pocketed likes of Vice and BuzzFeed have missed revenue targets amid this shift. The subscription-based model used by the New York Times is not feasible for most publications, where newsrooms are whittled down to component parts, and audiences expect free content. Startups like the ad-free, subscription-only website The Athletic are using investors’ money, which will eventually run out, to hire at seemingly unsustainable rates. Conglomerates like Sinclair Broadcast Group and Gannett have snapped up local outlets to cut costs through synergies, threatening those outlets’ individual voices with a corporate political project and standardized content, respectively. Time Inc. was recently sold to the Meredith Corporation, which plans to chop up its vaunted brands and try to sell them off one by one. Companies like Vox Media have stayed afloat thanks in no small part to unpaid and underpaid labor. The entire industry is slimy and shadowy and fucked.

Having a multibillionaire patron like Jeff Bezos, who owns the Washington Post, is a viable way to survive, but even that model relies on the whims of the patron. In Los Angeles, Patrick Soon-Shiong, the multibillionaire medical entrepreneur finalizing his purchase of the Los Angeles Times, says all the right things about protecting journalism as a civic institution. But having a wealthy owner subjects a publication to a complex web of potential conflicts of interest—take casino magnate and GOP donor Sheldon Adelson’s purchase of the Las Vegas Review-Journal in late 2015. Looming above such billionaire ownership is the question of where a patron’s philanthropic bent ends and their personal quest for money or power begins. After hedge-fund vulture Alden Global Capital bought the Denver Post and slashed its budget until a fraction of the newsroom was left, the paper revolted publicly, publishing editorials calling for the company to sell the newspaper to an owner who cares about journalism.

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This isn’t heartening for GMG and other editorial divisions of Univision, like the depleted Noticias. The private equity firms are desperately trying to exit the investment with a profit. Even if they do cut into bone to make the company look appealing to would-be buyers, what’s left might be too spare to keep revenues up, putting the company at risk of a major debt restructuring.

In the meantime, the board sends executives into the GMG newsroom to tell skeptical employees to their faces that they care about the journalism here and that even though GMG has grown, as asked, year over year, “growth is only one component” in making tough choices. While Sameer Deen didn’t create this situation, his communication missteps and inability to provide hard information to people who don’t know if they should start looking for new jobs have incensed GMG staffers. Deen, and now O’Connor, have been meeting individually and collectively with the heads of all GMG sites, but these marathon meetings haven’t done much to dispel the notion that they’re simply going through the motions while consultants make their recommendations and Univision prepares to hand out pink slips in June.

For its part, Univision said in a statement, which can be read in full here:

At UCI, we have a firm commitment to support and nurture fierce, independent journalism. Our award-winning news teams have a legacy of providing direct and unfiltered access to news and information and we are committed to maintaining that spirit of vibrant journalism across our portfolio, including the Gizmodo Media Group.

We continue to believe GMG is a valuable asset and important brand that will keep thriving. GMG attracts loyal and highly engaged audiences, both of which are unique and incredibly important in this landscape.

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Univision isn’t the only company to falter under predatory private equity debt-loading, and its employees are hardly the first in media to face months of existential dread as higher-ups with no experience in or concern with journalism decide their fate. Even if we survive this round of cuts relatively unscathed, our unstable, bumbling, debt-ridden corporate parent can decide to shut us down or turn these sites into a hellscape of branded content and inane social video at any point. But they can’t do it in the dark.

Editing and additional reporting by Nona Willis Aronowitz, Aleksander Chan, Kashmir Hill, Daniel King, Tim Marchman, and Jack Mirkinson.