Facing a revenue slowdown in 2006, Warner Bros. Entertainment is laying off 400 employees companywide — including Warner Independent Pictures production topper Michael Andreen — as part of an aggressive belt tightening, and even as the film side enjoys a banner year at the box office.
Of those staffers, 250 were notified Wednesday. The rest will be alerted in the next few days, according to a Warner spokesman. All are among the 4,550 employees who work at the studio’s lot in Burbank. Warner employs 8,000 people worldwide.
Warner wouldn’t say who was being laid off, except to confirm word that Andreen and Warner Independent exec VP of business affairs Andrew Kramer — two of the top five execs at the specialty arm — were being let go. The contracts for the remaining 24 Warner Independent staffers, including prexy Mark Gill, were simultaneously renewed in recent days.
No other top creative exec, either on the film or TV side, was mentioned as word of Andreen’s departure spread.
Each of the studio’s four divisions are being affected — Warner Bros. Pictures, Warner Bros. Home Entertainment Group, Warner Bros. Television Group and Warner Bros. Consumer Products.
“We had to take some difficult measures to position the company for the future. We acknowledge that these decisions have affected people’s livelihoods and to that end, we examined every aspect of our business in order to cut costs responsibly and to keep staff reductions to a minimum,” Warner Bros. Entertainment said in a statement.
Move came as parent conglom Time Warner prepared to report third-quarter earnings this morning . The world’s largest media company — which has come under pressure by corporate raider Carl Icahn — is aggressively looking at its costs, asking all divisions to meet certain financial targets.
Anticipating a slowdown in growth next year, particularly on the DVD side, Warner Bros. Entertainment chairman-CEO Barry Meyer and prexy-chief operating officer Alan Horn have been spearheading a thorough and aggressive budget review.
Some divisions were given a mark by which to reduce their budgets, with Warner Independent asked to shave off 10%.
Meyer and Horn also have realigned the company, combining all TV operations under one umbrella, and merging home entertainment and all digital operations under one roof. Streamlining could have resulted in some job duplication, such as in marketing.
By being proactive, the studio is trying to avoid a situation in which it finds itself in crisis mode.
Insiders at Warner said there probably won’t be more job cuts. In addition to the layoffs, Warner Bros. is in the process of studying various cost reductions.
Warner Bros. is hardly alone in facing a projected slowdown in revenue, considering the maturation of the DVD market and other market pressures. It’s likely other studios could be facing cost reductions and layoffs in the coming months as well.
Layoffs, believed to be effective by the end of the year, weren’t tied to today’s Time Warner earnings call, but rather, had to do with other legal requirements.
When word of Andreen’s departure began circulating in Hollywood, some speculated that Warner Independent, which saw one of the year’s few breakout hits with “March of the Penguins,” was getting out of the production biz to focus solely on acquisitions.
Sources at Warner Bros. quashed this speculation, saying the specialty arm would still produce films. Gill, as well as exec VP of marketing and publicity Laura Kim and exec VP of distribution Steve Friedlander could take on more responsibility with the departure of Andreen and Kramer.