BCG advises budget cut to Fusion Media Group of up to 35%

27 March 2018 Consultancy.uk

As communications giant Univision explores extensive cost cuts, facing mounting debt, and having shelved its plans for an initial public offering, the company has hired consulting firm BCG to find savings. The consultancy has since published a report recommending that Univision should cut as much as a third of the budget for its subsidiary Fusion Media Group.

Univision Communications is an American media company which primarily serves Hispanic and Latino Americans. Since its launch in 1962, the group has grown into a multifaceted media conglomerate, boasting a wide-ranging portfolio of media companies. However, as demographics shift, and digital disruptors such as Netflix eat into the market share of traditional market incumbents, Univision has seen profits fall, and a cumulative debt of $8 billion threaten the future of the group.

In one of the biggest deals during the leveraged-buyout boom, the current investors took the broadcaster private in 2007 for $13.7 billion, saddling the company with billions in debt just before the financial crisis. Now, over a decade later, with prospects looking decreasingly bright, Univision’s owners have come under pressure to turn around the company, after years of failing to find an exit. With the company binning its long-delayed plans to launch an initial public offering (IPO) in early 2018, having registered for an IPO with regulators in 2015, the company also abruptly replaced its Chief Financial Officer, Francisco Lopez-Balboa, a former Goldman Sachs banker who joined in 2015 to take the company public, with longtime Univision executive Peter Lori.

BCG advises budget cut to Fusion Media Group of up to 35%

Instead, Univision’s owners are now looking to the consulting industry for external advice, with the primary message being that the group should cut costs, fast. Univision hired Boston Consulting Group (BCG) to review the company’s business. A large part of BCG’s preliminary recommendations, centre around the cutting of the budget of Fusion Media Group (FMG) by as much as 35%, according to the press.

FMG launched in April 2016, after Univision bought out Disney's stake in Fusion, through the Fusion Media Network joint venture between Univision & Disney-ABC. Since its inception, FMG has acquired a multitude of high-profile online media properties, including Gizmodo, The Onion, ClickHole, The A.V. Club and Jezebel, alongside its more traditional broadcasting outlets Fusion and the El Rey Network. The group boasted a strong combined digital reach of around 65.6 million people as of Spring 2016.

Now, however, Univision looks set to reduce the company’s budget by more than a third, as well as making layoffs, on the advice of BCG. While the report stressed that the final amount of budget cuts across Univision could still change, the stringent cuts have reportedly begun to hit FMG’s staff count. Some layoffs have already begun to hit the media company, with the Presidents of both Fusion Media Group and the Fusion cable network among the most high-profile layoffs. Streamlining operations at the Fusion cable channel is a top priority for BCG’s the recommendations.

As reported by the Wall Street Journal, a number of digital staffers at the company have voiced their frustration at the perceived reallocation of funds from an aspect of Univision’s operations that is not struggling, in order to subsidise the rest of its operations.

One source told the press, “They’re deep cuts for a business that isn’t in trouble. It’s taking money out of the digital business, which is roughly running at break-even, to shore up the declining ratings.”

“This is cutting into muscle,” another commented. “These are not operations that are running with a lot of overhead.”

A Univision representative meanwhile contended that the measures were in fact necessary, stating, “We are undergoing a review to ensure that UCI is best positioned to compete in a media industry that is rapidly evolving. This includes looking at all aspects of our business. By taking steps to streamline parts of our operations, we will be better positioned to invest in areas of growth that will best serve our audiences, community and partners into the future.”

BCG was also recently hired by US grocers Whole Foods, following the company’s buyout by web-retailer Amazon. The firm was asked to shave some $300 million off of Whole Foods’ operating costs, while improving customer service in the process.

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How data insights helped Network Rail improve the South-East route

11 April 2019 Consultancy.uk

Amey Consulting has leveraged data insights to assist Network Rail with the improvement of its South-Eastern route. Using the Quartz tool, which monitors train movement, Network Rail will now be able to commit to data-enabled interventions to quickly improve underperforming train stations.

With rail services in the UK coming under strain from the demands of modern commuter life, while the infrastructure and service delivery of the nation’s railways has come in for sustained criticism in recent years, a period of regeneration is on the cards at last. Network Rail is the owner and infrastructure manager of most of the railway network in Great Britain, and has subsequently tapped the consulting industry on a regular basis to help find areas of improvement.

The group recently drafted in consultancy BearingPoint to conduct a thorough organisational evaluation and advise Network Rail (High Speed) on attaining a ‘fit for purpose’ organisational standard – for which the consultancy was nominated at the 2019 MCA Awards. Meanwhile, ArupArcadis and Aecom have been contracted to help Colas Rail and Babcock Rail implement a decade-long framework for Network Rail, aimed at supporting the delivery of the next generation of rail systems, with the contracts said to be worth as much as £5 billion

How data insights helped Network Rail improve the South-East route

As Network Rail further aims to improve its performance and customer service offering, another area it has sought help from the consulting sector for is its South-East route. The network of railways connects London with the southern parts of the country, as well as with Europe, making it the busiest in the country, with more than 500 million passenger journeys per year. This crucial expanse of rail was plagued with small minute delays, which were impacting millions of passengers every day, while reducing the efficiency and capacity of the overall network – something Amey Consulting was selected to help solve.

Amey Consulting soon determined that with the sub-threshold delays to services only lasting for 1 or 2 minutes, most were not the subject of detailed root cause analysis, and this made their corrections almost impossible – with dire consequences. Without addressing these delays, passenger satisfaction would fall, while the capacity and efficiency of the network would be reduced, stinging the income of Network Rail even before a host of delay-related fines would hit the company.

In order to help the client gain a better understanding of where, how, when and what these small delays occur, Amey Consulting looked to demonstrate the value of data-led consulting, with a significant reduction in delays within the first month of rolling out changes to key stations. The consultants embedded themselves in Network Rail’s team, helping them learn the key skills needed to support and apply data-driven solutions.

Agile transport

This involved the deployment of the Quartz tool. The system utilises to-the-second train movement data to present the performance of individual stations across the South-East route. It allows users to effortlessly understand station performance with a high level of detail, and use this information to identify losses caused by small-minute delays. The granular data allows for targeted actions to drive efficiency savings and performance improvements. More importantly, it allows users to understand the impact of small process changes on performance. 

Steve Dyke, an Executive Partner at Amey Consulting, said of the project, “We looked to identify the physical root cause on the infrastructure, building a case for change then managing that project implementation and tracking the benefit/value.  In doing so we are working to define a data performance improvement service to the operational and infrastructure owners.”

Just as important for the project as the technology, however, was teaching the Network Rail team how to leverage it after the consultants were gone. The Amey Consulting team worked to develop an agile working culture within Network Rail’s South-East division, helping staff to be confident in using data to improve the journeys of millions of people per year by attacking the problem from the ground up.

Dyke concluded, “This is less about the tools and about the approach to managing performance.  It meant using by-the-second analysis, data science, and then agile development to visualise and identify areas where improvements can be made.  We then worked with NR to change the way they approached the management of the infrastructure changes.  So rather than pass the information down the value chain, any of which could have been missed, we managed the change end-to-end.”

The project was so successful that Amey Consulting was also among those honoured at the recent MCA Awards. The firm scooped the Performance Improvement in the Public Sector prize for its work with Network Rail, at the 2019 ceremony in London.