The insults towards Palisades Media Group Chief Govt Roger Schaffner continued to pile up at his Santa Monica workplace.
Laid-off employees affixed letters from an previous workplace signal to spell out “ass” on his glass workplace door final week. Others positioned yellow, blue and inexperienced sticky notes with messages that learn “Disgrace on you!!!,” “I hope you can not sleep at evening.”
For a lot of of Palisades’ roughly 100 workers, the workplace closure July 15 got here out of nowhere.
The advert company, which launched in 1996, counted Netflix as its largest consumer, inserting advertisements in newspapers and different retailers to advertise its critically acclaimed applications for awards. All of a sudden in a single e mail, workers discovered not solely that their workplace closing in a couple of hours but in addition that they'd all lose their jobs.
“The corporate has endured the cumulative monetary results of the pandemic/Covid, which got here to a head this yr,” Schaffner wrote in a July 15 employees e mail reviewed by The Occasions. “With consumer budgets/income taking place and bills going larger, we discover ourselves in an untenable place, and are actually compelled to shut the workplace.”
However the rationalization did little to mollify workers, who stay surprised by the abrupt closure of a enterprise that had been a fixture of the studio promoting enterprise for greater than 20 years. They mentioned they got no severance and solely one-third of their trip pay and added that the one communication they acquired from Schaffner got here from emails.
“We have been all blindsided,” mentioned one among a number of former workers who declined to be named for worry of reprisals. “Everybody was doing enterprise as regular. I had buys to be positioned.”
The closure, first reported by the Wrap, has been notably devastating to veteran workers, a few of whom recalled sacrificing holidays and private time with their households to assist the corporate throughout powerful instances.
“It’s a deep betrayal of the dedication and funding of my time over a decade,” mentioned one other former worker who labored at Palisades for greater than 10 years. He mentioned he’s owed round $15,000 in unpaid trip time. “I’ve been nothing however loyal to an organization.”
Ron Grant, Schaffner’s lawyer, mentioned his consumer wouldn't remark for this story.
So what occurred?
Former workers and distributors informed The Occasions the corporate’s sudden demise adopted a sequence of what they described as poor enterprise selections that deepened monetary issues brought on by the COVID-19 pandemic and different elements, together with the lack of important enterprise from its most vital consumer, Netflix.
Palisades Media could be employed by Netflix and different purchasers to put advertisements at varied retailers after which pay these retailers after the advertisements ran.
In a gathering earlier this month, senior managers have been informed by Palisades Media President and Chief Working Officer Laura Jean Bracken that the corporate collected $14 million to $16 million from Netflix and different purchasers, however had not paid the cash to distributors. When pressed by the group for extra data, Bracken provided no additional particulars, mentioned two folks accustomed to the assembly who weren't approved to remark.
Bracken didn't reply to a request for remark.
Within the days earlier than closing, Palisades Media owed hundreds of thousands of dollars to numerous publications, together with the New York Occasions, the Los Angeles Occasions, KTLA, and the Wrap, sources mentioned. The company owed greater than $1 million every to the New York Occasions and Los Angeles Occasions, the sources mentioned.
L.A. Occasions spokeswoman Hillary Manning declined to remark. A spokesperson for the New York Occasions couldn't be reached.
Netflix, which works with many companies, declined to remark.
Though Palisades Media represented a small fraction of Netflix’s media spend, the company had about 40 employees engaged on the account, insiders mentioned.
Bother emerged this yr when Netflix moved its advert work for client titles from Palisades Media to its rival, Mediahub, in accordance with a December e mail written by Schaffner that was seen by The Occasions. Palisades Media would retain its awards campaigns work for Netflix, however the transfer was a monetary blow.
“Clearly this implies we must lay off numerous employees members which we won't do till after the vacations,” Schaffner mentioned within the e mail.
However the anticipated cuts by no means got here. Throughout the peak of the pandemic, Palisades agreed to not lay off employees as a situation for receiving a waiver from paying again federal loans by means of the Paycheck Safety Program in 2020 and 2021. Palisades acquired $3.89 million in PPP loans that the corporate mentioned would go towards payroll and healthcare prices, in accordance with ProPublica.
This yr, some former workers anticipated there could be layoffs even because the company misplaced purchasers amid the healthcare disaster. Nonetheless, there have been no employees cuts or wage reductions that had been widespread all through the leisure trade.
“The manager management might have stepped up and made arduous selections that have been wanted,” one former worker mentioned. “They have been prepared to let the entire ship sink.”
In the meantime, Palisades Media continued to lease the highest ground on the Santa Monica Water Backyard workplace complicated, though many individuals have been working from house. The corporate has a lease for 25,245 sq. toes by means of early 2027, in accordance with CoStar, which tracks actual property traits. In April, the corporate made its workplace obtainable for sublease, CoStar mentioned.
Schaffner began Palisades Media Group in 1996, after working at media company ICG, the place he constructed an leisure division representing impartial film studios, in accordance with his LinkedIn web page.
Palisades dealt with media buys for varied Hollywood purchasers, together with Miramax, the influential studio based by Bob Weinstein and his brother Harvey, the previous film mogul who was convicted in 2020 of committing a legal sexual act and third-degree rape.
The company constructed a repute of getting proficient professionals that labored with studios and types comparable to Mercury Insurance coverage and the Los Angeles Philharmonic. In 2000, Schaffner described Palisades as a $250-million enterprise to Advert Age.
“Via arduous work, sensible enterprise insights, and moral dealings, Roger has created his legacy within the media group,” his bio on Palisades Media’s web site reads.
The company’s fortunes, nonetheless, took a flip for the more serious this month when a vendor threatened to not run any extra advertisements from Palisades until it paid the cash it owed for Netflix advertisements, and Schaffner informed employees that the company’s monetary points have been insurmountable, insiders mentioned.
“Sadly the money move solely allowed for one final payroll,” Schaffner wrote in a second July 15 e mail to workers. “Should you miss a payroll in California, the penalties are very extreme. Thus the final minute shutdown.”
The information got here as a blow to look media specialist Lea Yang, who had been working on the advert company for lower than a yr on an H-1B visa. If Yang, 24, doesn’t discover a job inside 60 days, she could possibly be deported to Taiwan.
“It was undoubtedly a shock,” Yang mentioned when she first learn in an e mail that the corporate was shutting down. “It was fairly emotional that afternoon.”
Occasions employees researcher Scott Wilson contributed to this report.
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