Disney to cut studio jobs, pare production
Claudia Eller
Los Angeles Times
July 13, 2006
Despite last weekend's record debut of its Pirates of The Caribbean: Dead Man's Chest, the Walt Disney Co. is moving ahead with plans to slash hundreds of studio jobs and curtail the number of films it makes in a larger effort to squeeze costs.
Across-the-board layoffs are expected to hit every major domestic and international sector of the movie studio, people familiar with the plans said, including production, post-production, legal and business affairs, marketing, distribution and home video.
The studio's animation operation, Miramax Films unit and its music group are expected to be spared.
An exact number of job cuts wasn't known Wednesday, although one person familiar with the studio's plans estimated the head count will be reduced by 20 percent to 25 percent.
The latest moves are part of an ongoing, nearly decade-long retrenchment by Disney's film studio to boost profitability on its films as the financial risks in the movie business grow more treacherous.
Disney's cuts mirror similar moves made recently at such competitors as Warner Bros., Metro-Goldwyn-Mayer and Paramount Pictures as well as its newly acquired DreamWorks SKG unit.
Despite Hollywood's box-office recovery this year, studio profits are still being eaten away by higher production and marketing costs. In addition, growth in the lucrative DVD business is slowing dramatically.
Disney expects to cut the number of movies it makes annually to 10, down from the 14 to 21 a year it has released over the past five years.
Most of the ongoing productions will carry the Disney family label, as the lucrative Pirates of the Caribbean franchise does now, and will include PG-13 offerings as well as PG- and G-rated movies aimed at younger audiences.
Disney's strategy is to continue returning the studio to its roots in family films that not only have broad audience appeal, but can sell merchandise and be exploited at its theme parks. Disney ventured heavily into more adult fare in the early 1990s, but experienced mixed success and found family films more reliable profit generators.
However, Disney has no plans to abandon the adult audience, making two to three films a year under its Touchstone Pictures banner.
Touchstone is home to Disney's big-budget action pictures, such as Pearl Harbor and Armageddon from producer Jerry Bruckheimer, as well as smaller, quirkier fare such as director Wes Anderson's The Life Aquatic With Steve Zissou.
Disney's executives, including studio chairman ________ Cook, declined to be interviewed. Studio spokeswoman Heidi Trotta would only say, "We are constantly evaluating our business."
Cook and his boss, Disney chief executive Robert Iger, have repeatedly foreshadowed the latest actions, telling Wall Street analysts that studio operations were undergoing an extensive review to find ways to boost the bottom line. Cook has explicitly said the studio will be more selective about the quality and number of Touchstone films it produces in the future.
The timing of Disney's revamping is particularly awkward because the studio is enjoying a banner summer.
The Pirates sequel has grossed $169.5 million domestically since its record-breaking debut last weekend. The movie -- which cost more than $200 million to produce -- is expected to be a global juggernaut for Disney. A third Pirates installment is due out in May.
Cars, produced by Disney's newly acquired Pixar Animation Studios, has racked up more than $200 million in domestic ticket sales to date.
Nonetheless, the studio performance has been uneven. Although it released such hits as The Chronicles of Narnia: The Lion, The Witch and The Wardrobe, Disney struck out the past few years with The Alamo, King Arthur, Hidalgo and Home on the Range.
The Los Angeles Times is a Tribune Publishing newspaper.
Claudia Eller
Los Angeles Times
July 13, 2006
Despite last weekend's record debut of its Pirates of The Caribbean: Dead Man's Chest, the Walt Disney Co. is moving ahead with plans to slash hundreds of studio jobs and curtail the number of films it makes in a larger effort to squeeze costs.
Across-the-board layoffs are expected to hit every major domestic and international sector of the movie studio, people familiar with the plans said, including production, post-production, legal and business affairs, marketing, distribution and home video.
The studio's animation operation, Miramax Films unit and its music group are expected to be spared.
An exact number of job cuts wasn't known Wednesday, although one person familiar with the studio's plans estimated the head count will be reduced by 20 percent to 25 percent.
The latest moves are part of an ongoing, nearly decade-long retrenchment by Disney's film studio to boost profitability on its films as the financial risks in the movie business grow more treacherous.
Disney's cuts mirror similar moves made recently at such competitors as Warner Bros., Metro-Goldwyn-Mayer and Paramount Pictures as well as its newly acquired DreamWorks SKG unit.
Despite Hollywood's box-office recovery this year, studio profits are still being eaten away by higher production and marketing costs. In addition, growth in the lucrative DVD business is slowing dramatically.
Disney expects to cut the number of movies it makes annually to 10, down from the 14 to 21 a year it has released over the past five years.
Most of the ongoing productions will carry the Disney family label, as the lucrative Pirates of the Caribbean franchise does now, and will include PG-13 offerings as well as PG- and G-rated movies aimed at younger audiences.
Disney's strategy is to continue returning the studio to its roots in family films that not only have broad audience appeal, but can sell merchandise and be exploited at its theme parks. Disney ventured heavily into more adult fare in the early 1990s, but experienced mixed success and found family films more reliable profit generators.
However, Disney has no plans to abandon the adult audience, making two to three films a year under its Touchstone Pictures banner.
Touchstone is home to Disney's big-budget action pictures, such as Pearl Harbor and Armageddon from producer Jerry Bruckheimer, as well as smaller, quirkier fare such as director Wes Anderson's The Life Aquatic With Steve Zissou.
Disney's executives, including studio chairman ________ Cook, declined to be interviewed. Studio spokeswoman Heidi Trotta would only say, "We are constantly evaluating our business."
Cook and his boss, Disney chief executive Robert Iger, have repeatedly foreshadowed the latest actions, telling Wall Street analysts that studio operations were undergoing an extensive review to find ways to boost the bottom line. Cook has explicitly said the studio will be more selective about the quality and number of Touchstone films it produces in the future.
The timing of Disney's revamping is particularly awkward because the studio is enjoying a banner summer.
The Pirates sequel has grossed $169.5 million domestically since its record-breaking debut last weekend. The movie -- which cost more than $200 million to produce -- is expected to be a global juggernaut for Disney. A third Pirates installment is due out in May.
Cars, produced by Disney's newly acquired Pixar Animation Studios, has racked up more than $200 million in domestic ticket sales to date.
Nonetheless, the studio performance has been uneven. Although it released such hits as The Chronicles of Narnia: The Lion, The Witch and The Wardrobe, Disney struck out the past few years with The Alamo, King Arthur, Hidalgo and Home on the Range.
The Los Angeles Times is a Tribune Publishing newspaper.
