Disney Said to Be Considering Cost Cuts That Include Layoffs
New York Times May 27, 2006
By LAURA M. HOLSON
LOS ANGELES, May 26 — Walt Disney Studios is expecting a big summer with the release of the highly anticipated animated film "Cars" and the next installment in the popular "Pirates of the Caribbean" series.
But not all is well in movieland — and changes are afoot. With a decline in DVD sales and the rising cost of making movies, Hollywood in general has been tightening its belt. And now Disney, as part of a long-term review, is contemplating layoffs, looking to rein in costs and rethinking the type of movies it wants to make at its live-action Disney Studios, according to people apprised of Disney's planning.
It is unclear how many positions will be cut and when. The studio has already pulled back from layoff plans twice. But now, some of those apprised of Disney's plans suggest layoffs could come in July.
Disney's review includes an overall repositioning of the Walt Disney Pictures brand as a home for somewhat daring (meaning PG-rated) family fare and ambitious franchises, including the "Pirates" trilogy and "The Chronicles of Narnia." Already Disney has scaled back production in the Miramax division and is expected to cut production at its sibling, Touchstone Pictures.
"They are going through a transition," said Frank Marshall, a producer who directed Disney's recent hit "Eight Below." "They are scaling back and looking at different genres of stories to do."
Disney's spokeswoman, Heidi Trotta, said studio executives declined to comment. "We are constantly evaluating our business to make it better and more efficient." she said.
Hollywood agents and producers have been expecting an overhaul since last fall when Disney's chief executive, Robert A. Iger, asked Richard Cook, chairman of Walt Disney Studios, to review the studio's production, home video, marketing and distribution divisions.
Disney had a humbling year in 2004 when it missed the mark on some of its adult-oriented live-action films, including "The Ladykillers," "The Alamo" and "The Life Aquatic With Steve Zissou." In 2005 Disney fell to No. 5 in domestic box-office market share bringing in $962 million, down from No. 1 in 2003, when it led with $1.5 billion in domestic ticket sales.
Some of the people apprised of Disney's plans, who requested anonymity because the review was continuing, estimate Disney could lay off 5 percent of the studio's staff, although that could climb to 10 percent. International distribution and home video are expected to be the divisions hit hardest, they said.
Mr. Cook said in a recent stock analyst meeting that Touchstone, which has released movies like the offbeat and quirky "Ladykillers," directed by Ethan and Joel Coen, and "The Life Aquatic" from Wes Anderson would release fewer movies.
With those films, Nina Jacobson, who oversees live-action movie production at the studio, sought to bring into the Disney family highly stylized filmmakers more commonly found at independent film studios, like Focus Features and Fox Searchlight.
Mr. Cook, speaking of coming Touchstone Films, told analysts, "We will be kind of picky on which ones we decide to make."
Mr. Marshall, who produced "Raiders of the Lost Ark" and "The Color Purple," said such movies were hard for Disney to market. "They stretched too far out of their comfort zone, not for them, but for the audience," he said. "It's tough for them to sell those movies that are out of the box for them."
By contrast, "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" from Walt Disney Pictures, which opened in December, was a certified hit. The tale of four young children battling an evil witch brought in $292 million at the domestic box office. It also gave the studio a much needed boost because it was one of the few bona fide blockbusters in recent years not produced by Pixar or Jerry Bruckheimer.
Since Disney first joined with Pixar on "Toy Story" in 1995, Pixar — recently acquired by Disney — has produced most of Disney's animated hits, including "Monsters, Inc.," "Finding Nemo" and "The Incredibles."
Mr. Bruckheimer, has been a steady supplier of live-action popcorn films as well, including "Pearl Harbor," "National Treasure" and the "Pirates" trilogy. He recently renegotiated his contract with Disney, a process that took two years, a person involved in the negotiations said.
"Disney is doing far better than before," said Richard Greenfield, a research analyst at Pali Research who has followed the studio for years.
In the April conference call, Mr. Cook said the studio would continue to tinker with its mix of movies, picking projects that can be marketed across all Disney divisions. Since Mr. Iger took over at Disney, such cross-marketing has been a high priority.
Disney "is the name on the door and when we do a 'Pirates of the Caribbean' or a 'Narnia' or a 'National Treasure,' it just lifts the entire enterprise up," Mr. Cook said. "It helps what our parks are doing. It's creating new characters or new stories."
But just because Disney is dabbling in PG fare, does not mean the studio will stray far from its traditional sensibilities. There still will not be much swearing, Mr. Cook said of Walt Disney Pictures movies. "We're not going to deal with sexual issues. But we are not afraid to take on the intensity or the fun or whatever. We can have a Captain Jack Sparrow in a PG-13 movie, but he's not doing anything that we think is inappropriate to be in a traditional Disney movie." (Captain Jack Sparrow is Johnny Depp's character in "Pirates.")
Whatever the changes, the studio is not expected to overhaul management. Twice already — in December and this month — layoffs were expected, but they were called off after studio executives said they needed more time to figure out who would be reassigned, the people said. In December, executives were waiting to see if "Narnia" fared well enough to spawn a sequel, the people said.
Both Mr. Cook and Ms. Jacobson recently renegotiated their contracts, these people said. And Mr. Iger has sought to bring executives even closer into his fold. Mr. Cook, who kept his office on the second floor of Disney's Burbank headquarters to be near his staff, recently moved to the sixth floor, where Mr. Iger and other division leaders are.
Mr. Cook is not expected to trim the studio's movie production staff, the people said. Instead it is their focus that will change. Mr. Marshall said it was unlikely the studio would do more sports-themed movies in the near future after the middling showing of "Glory Road," the tale of a basketball coach who inspired his team. Disney had success in recent years with the genre, including "The Rookie" and "Remember the Titans."
The studio is trimming individual movie budgets, too, although Mr. Cook told the analysts that the overall studio budget remained the same. Mr. Marshall said the budget for "Eight Below" was reduced by 30 percent before Disney agreed to make it. Initially, the studio "pulled the plug on the movie" because the budget was too high, Mr. Marshall said. When he later joined the project, Mr. Marshall said he agreed to a budget of about $40 million.
"I think they are going to be a little bit safer," Mr. Marshall said of the studio.
New York Times May 27, 2006
By LAURA M. HOLSON
LOS ANGELES, May 26 — Walt Disney Studios is expecting a big summer with the release of the highly anticipated animated film "Cars" and the next installment in the popular "Pirates of the Caribbean" series.
But not all is well in movieland — and changes are afoot. With a decline in DVD sales and the rising cost of making movies, Hollywood in general has been tightening its belt. And now Disney, as part of a long-term review, is contemplating layoffs, looking to rein in costs and rethinking the type of movies it wants to make at its live-action Disney Studios, according to people apprised of Disney's planning.
It is unclear how many positions will be cut and when. The studio has already pulled back from layoff plans twice. But now, some of those apprised of Disney's plans suggest layoffs could come in July.
Disney's review includes an overall repositioning of the Walt Disney Pictures brand as a home for somewhat daring (meaning PG-rated) family fare and ambitious franchises, including the "Pirates" trilogy and "The Chronicles of Narnia." Already Disney has scaled back production in the Miramax division and is expected to cut production at its sibling, Touchstone Pictures.
"They are going through a transition," said Frank Marshall, a producer who directed Disney's recent hit "Eight Below." "They are scaling back and looking at different genres of stories to do."
Disney's spokeswoman, Heidi Trotta, said studio executives declined to comment. "We are constantly evaluating our business to make it better and more efficient." she said.
Hollywood agents and producers have been expecting an overhaul since last fall when Disney's chief executive, Robert A. Iger, asked Richard Cook, chairman of Walt Disney Studios, to review the studio's production, home video, marketing and distribution divisions.
Disney had a humbling year in 2004 when it missed the mark on some of its adult-oriented live-action films, including "The Ladykillers," "The Alamo" and "The Life Aquatic With Steve Zissou." In 2005 Disney fell to No. 5 in domestic box-office market share bringing in $962 million, down from No. 1 in 2003, when it led with $1.5 billion in domestic ticket sales.
Some of the people apprised of Disney's plans, who requested anonymity because the review was continuing, estimate Disney could lay off 5 percent of the studio's staff, although that could climb to 10 percent. International distribution and home video are expected to be the divisions hit hardest, they said.
Mr. Cook said in a recent stock analyst meeting that Touchstone, which has released movies like the offbeat and quirky "Ladykillers," directed by Ethan and Joel Coen, and "The Life Aquatic" from Wes Anderson would release fewer movies.
With those films, Nina Jacobson, who oversees live-action movie production at the studio, sought to bring into the Disney family highly stylized filmmakers more commonly found at independent film studios, like Focus Features and Fox Searchlight.
Mr. Cook, speaking of coming Touchstone Films, told analysts, "We will be kind of picky on which ones we decide to make."
Mr. Marshall, who produced "Raiders of the Lost Ark" and "The Color Purple," said such movies were hard for Disney to market. "They stretched too far out of their comfort zone, not for them, but for the audience," he said. "It's tough for them to sell those movies that are out of the box for them."
By contrast, "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe" from Walt Disney Pictures, which opened in December, was a certified hit. The tale of four young children battling an evil witch brought in $292 million at the domestic box office. It also gave the studio a much needed boost because it was one of the few bona fide blockbusters in recent years not produced by Pixar or Jerry Bruckheimer.
Since Disney first joined with Pixar on "Toy Story" in 1995, Pixar — recently acquired by Disney — has produced most of Disney's animated hits, including "Monsters, Inc.," "Finding Nemo" and "The Incredibles."
Mr. Bruckheimer, has been a steady supplier of live-action popcorn films as well, including "Pearl Harbor," "National Treasure" and the "Pirates" trilogy. He recently renegotiated his contract with Disney, a process that took two years, a person involved in the negotiations said.
"Disney is doing far better than before," said Richard Greenfield, a research analyst at Pali Research who has followed the studio for years.
In the April conference call, Mr. Cook said the studio would continue to tinker with its mix of movies, picking projects that can be marketed across all Disney divisions. Since Mr. Iger took over at Disney, such cross-marketing has been a high priority.
Disney "is the name on the door and when we do a 'Pirates of the Caribbean' or a 'Narnia' or a 'National Treasure,' it just lifts the entire enterprise up," Mr. Cook said. "It helps what our parks are doing. It's creating new characters or new stories."
But just because Disney is dabbling in PG fare, does not mean the studio will stray far from its traditional sensibilities. There still will not be much swearing, Mr. Cook said of Walt Disney Pictures movies. "We're not going to deal with sexual issues. But we are not afraid to take on the intensity or the fun or whatever. We can have a Captain Jack Sparrow in a PG-13 movie, but he's not doing anything that we think is inappropriate to be in a traditional Disney movie." (Captain Jack Sparrow is Johnny Depp's character in "Pirates.")
Whatever the changes, the studio is not expected to overhaul management. Twice already — in December and this month — layoffs were expected, but they were called off after studio executives said they needed more time to figure out who would be reassigned, the people said. In December, executives were waiting to see if "Narnia" fared well enough to spawn a sequel, the people said.
Both Mr. Cook and Ms. Jacobson recently renegotiated their contracts, these people said. And Mr. Iger has sought to bring executives even closer into his fold. Mr. Cook, who kept his office on the second floor of Disney's Burbank headquarters to be near his staff, recently moved to the sixth floor, where Mr. Iger and other division leaders are.
Mr. Cook is not expected to trim the studio's movie production staff, the people said. Instead it is their focus that will change. Mr. Marshall said it was unlikely the studio would do more sports-themed movies in the near future after the middling showing of "Glory Road," the tale of a basketball coach who inspired his team. Disney had success in recent years with the genre, including "The Rookie" and "Remember the Titans."
The studio is trimming individual movie budgets, too, although Mr. Cook told the analysts that the overall studio budget remained the same. Mr. Marshall said the budget for "Eight Below" was reduced by 30 percent before Disney agreed to make it. Initially, the studio "pulled the plug on the movie" because the budget was too high, Mr. Marshall said. When he later joined the project, Mr. Marshall said he agreed to a budget of about $40 million.
"I think they are going to be a little bit safer," Mr. Marshall said of the studio.
isney Pondering Layoffs As Part Of Cost Cuts-NYT