DreamWorks Animation Cuts One Movie A Year And 500 Jobs
According to Deadline Hollywood, the company's stock has lost close to 40 percent of its value over the last year. The reason has been the poor box office performance of such movies as Turbo, Rise of the Guardians, Mr. Peabody & Sherman, and Penguins of Madagascar.
"The number one priority for DreamWorks Animation's core film business is to deliver consistent creative and financial success," said DreamWorks Animation Chief Executive Officer Jeffrey Katzenberg in a company press release. "I am confident that this strategic plan will deliver great films, better box office results, and growing profitability across our complementary businesses."
Not only will many employees be cut loose, but DreamWorks is scaling back its feature schedule from three films a year to two: one original and one sequel to a previous title. The Hollywood Reporter noted that the company will release one film, Home, in 2015. Next year will see Kung Fu Panda 3 and a new film, Trolls. An adaptation of the popular Dav Pilkey kid's book, Captain Underpants, will see its production outsourced overseas "at a significantly lower cost" than originally planned.
DreamWorks had a string of 17 consecutive hits from 1997 to 2012, according to the New York Post. But a decision to move from two features a year to three appears to have put both financial and creative pressure on the company, demanding a pace that it couldn't keep while maintaining the necessary consumer magic.
"I intend to refocus more of my time and efforts in support of our movie-making enterprise," Katzenberg said on a teleconference call, according to Bloomberg. "Despite having one of the best creative teams in the world, we believe that our effort to make three films each and every year was just too ambitious and has led to inconsistent performance."
The restructuring is expected to cost $290 million, three-quarters of which will be recognized in the company's 2014 financial year, 20 percent in 2015, and the remaining five percent in 2016. That includes $60 million in severance, benefits, relocation, and other payments to employees, $200 million in write-offs on unreleased projects, and $30 million to close the company's northern California studio.
As part of the plan, Vice Chairman Lewis Coleman and COO Mark Zoradi will leave the company.