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Major Cuts at Disney Are Expected 13 Jul 2006 23:40 #12962

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It will slash hundreds of studio jobs and release fewer movies in a bid to reduce costs, sources say.

By Claudia Eller
Times Staff Writer
Published July 13, 2006

Despite last weekend's record debut of its "Pirates of the Caribbean: Dead Man's Chest," Walt Disney Co. is moving ahead with plans to slash hundreds of studio jobs and curtail the number of films it makes in an 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, postproduction, legal and business affairs, marketing, distribution and home video. The Burbank studio's animation operation, its Miramax Film unit and its music group are expected to be spared.

An exact number of planned job cuts wasn't known Wednesday, although people familiar with the studio's plans estimated that the headcount would be reduced by 20% to 25%.

The latest moves are part of a nearly decade-long retrenchment by Disney to boost profitability of its films as the financial risks in the movie business grow more treacherous.

Disney's overhead cuts follow similar moves made recently at competitors Warner Bros., Metro-Goldwyn-Mayer Inc. and Paramount Pictures and 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 each year to 10, down from 14 to 21 a year over the last five years.

Most of the 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 and will continue to make two or three films a year under its Touchstone Pictures banner. Touchstone has been home to Disney's big-budget action movies, 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 executives, including studio Chairman Dick 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.

The timing of Disney's revamping comes at a particularly awkward moment because the studio is enjoying a banner summer.

The "Pirates" sequel has grossed $169.5 million domestically since its record-breaking premiere last weekend. Headlined by superstar Johnny Depp, 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 since its June 9 release.

Nonetheless, the studio performance has been uneven. Although it scored with such blockbusters as "The Chronicles of Narnia: The Lion, the Witch and the Wardrobe," Disney struck out the last few years with such costly duds as "The Alamo," "King Arthur," "Hidalgo" and "Home on the Range."

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Re: Major Cuts at Disney Are Expected 17 Jul 2006 08:49 #12963

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arg! better the devil you know than the one you don't!

Michael Hurley
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