Disney Staffers Brace for Layoffs Amid Planned Reorg (EXCLUSIVE)


Cuts expected after conclusion of company-wide review of operations

Employees at the Walt Disney Co. are bracing for layoffs that are expected in the coming weeks as part of a reorganization of key operations.

It is believed that the company’s movie studio will be hardest hit, particularly in the areas of home entertainment, production and marketing, according to multiple sources familiar with matter.

The exact number of reductions are still being determined, as Disney brass conclude a company-wide review process that tasked each division with ensuring that staff levels are in line with the company’s needs in a changing marketplace, particularly in divisions affected by shifts in new media and technologies. The internal audit was ordered late last year by Disney chief executive Bob Iger and chief financial officer Jay Rasulo to identify areas of redundancy and departments that need revamping amid changing business models.

Many at the studio expect that the cuts and restructuring will occur before the release of Disney’s second quarter earnings on May 7. Top execs have emphasized that the reorg is aimed at better positioning the Mouse House for future growth.

Staffers have been nervously awaiting the results of the review and the impending layoffs. In the homevideo division, as the sales of physical discs continues to decline and as the studio embraces more digital distribution platforms, fewer individuals are needed to manage that business. Iger believes digital deals with companies like Netflix and Apple’s iTunes are more profitable ways to offer up Disney’s library of films and TV shows.

See Also: LucasArts Lays Off Staff, Halts Game Production

On the movie production side, the studio is increasingly relying on titles from its various labels ‑ Marvel, Pixar and its recently acquired Lucasfilm ‑to fill its annual slate of eight to 11 releases a year. Along with pics flowing from its distribution deal with DreamWorks, the number of Disney initiated projects that studio executives develop has been drastically reduced.

As a result, Disney no longer needs the number of development executives it once did.

This year, Disney only has three homegrown pictures, “Oz The Great and Powerful,” already a hit, this summer’s “The Lone Ranger,” starring Johnny Depp and “Saving Mr. Banks,” a Tom Hanks vehicle about Walt Disney and “Mary Poppins” author P.L. Travers, out later this year. Last year, it was “The Odd Life of Timothy Green.”

The studio’s 2015 release sked so far includes a fifth “Pirates of the Caribbean,” Lucasfilm’s “Star Wars: Episode VII,” Marvel’s “The Avengers 2” and “Ant-Man,” Pixar’s “Finding Dory,” a sequel to “Finding Nemo.”

The studio is still feeling the pain from a round of cutbacks in 2011 and is wincing at what’s about to come.

“The previous layoffs cut away the muscle. These will cut us to the bone,” said one person inside the studio with knowledge of the coming cuts, which were described as “not insignificant,” when it comes to headcount.

Disney has already been sending staff packing.

On Wednesday, LucasArts, the interactive division of Lucasfilm, let go around 150 people as it exits the videogame production biz. It will now focus on licensing “Star Wars” games to third-party developers. As it looks to finally operate in the black, Disney Interactive has eschewed the traditional console business and is creating games for mobile and social media platforms. Its next high-profile release, “Disney Infinity,” blends toys with games, to tap into the successful “Skylanders” franchise, launched by Activision.

See Also: LucasArts Shutdown Triggers Layoffs at ILM

Disney Interactive already dismissed 50 employees last year and others when it shuttered Austin, Texas-based game studio Junction Point, behind “Epic Mickey.” Another 200 were let go in 2011.

The company also has been in consolidation mode, especially at divisions like consumer products, with a smaller staff overseeing products based on Pixar’s toons, Marvel’s superheroes and now “Star Wars.”

Iger is focused on Disney’s bottom line after several years of heavy investment in the company’s theme parks, cruise lines and acquisitions like the $4.06 billion purchase of Lucasfilm.

While Disney is coming off one of its best years — profits were up 18% to $5.7 billion in fiscal 2012, which ended Sept. 29 — Iger still believes there are more ways to run Disney more efficiently.

Company has increasingly been asked to emulate Marvel’s more cost-effective, streamlined approach to operating its own divisions, including consumer products division and licensing, for example, and is pushing for a similar strategy now that Disney is overseeing “Star Wars.”

The film studio may be one of the least profitable operations, but it’s also one of its most important, launching new franchisees that can boost the company’s other businesses, from theme parks to websites.

Pixar’s characters have been integrated into the parks worldwide, with the opening of “Cars Land” significantly upping attendance at California Adventure.

And much of the characters from Disney’s library of animated and live action films — including “Pirates of the Caribbean,” “Monsters University” and “Cars” — will be featured in the launch of the “Disney Infinity” game, in August.

(Dave McNary and Rachel Abrams contributed to this report.)

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  1. EliasEverlasting says:

    So Disney’s going from an innovative model to an acquiring model – it buys Marvel, buys Lucas, and other assorted past-its prime detritus (including the increasingly threadbare Muppets) and base new rides and films on that old stuff, rather than create new and original characters and films. God DAMN, but Disney isn’t Walt’s company anymore. Frankly, I think the only reason he’s even mentioned by Iger’s thugs and flunkies is because the guy still means something to us chumps and can still sell a few t-shirts every now and then. (They’ve already taken his first name off of the film titles).

  2. Alvin says:

    The price of going to a movie is so high most families can’t afford it. Your not allowed to take in any drinks of food so you will buy from the vendoe. Get the prices down to what people can afford and gradually raise prices when the economy can stand it. I love going to the movies but they don’t have to make a killing all at once.

    • Orthodox Nostalgia says:

      Pricing is exactly right. Digital media is increasing in popularity and Disney will create for themselves both a boon and a bane by joining in. On one hand, they could recieve a steady flow of income from the affiliate sites but on the other hand, the more ease people have to watch a movie, the less likely they are to purchase it. I belive the losses for Disney on their physical distribution could be attributed to the oppresive cost. I personally can’t go more than about $10 on DVD, $20 on Blu-ray and I know plenty of people who think even that is too high. This leaves those who want to buy Disney media little choice but to wait until it’s been used and had its price reduced. It seems Disney would rather their products be sold in a smaller distribution base with higher profit margin than to sell it for less to everyone. If they insist on such high margins they shouldn’t be surprised when the average person cannot afford it and their physical media sales decline. . . Just how I’m seeing it.
      Personally I own something like 30-40 Disney VHS/DVD/Blu-rays and I believe I only bought one of those brand new. (the rest were discounted as used or older). It’s not that I don’t wish to buy their media; I just can’t afford it.

      • Jason S. says:

        I agree. I have a much larger Disney DVD/Blu-ray collection, but the vast majority of that collection is used and second hand. I realize why Disney and other studios are excited by digital, one being the end of second hand sales, but I don’t know that it will be the bright future they possibly see if they keep going down this road.

        They need to start realizing that they are a family studio that makes family entertainment and that most families can’t afford their high prices all the time if ever. NetFlix is fun, but i see that more as the future of cable tv, not home entertainment. What if the title I want to watch isn’t on NetFlix or was but isn’t anymore? Physical media is the way to go, but they need to be realistic in how much they charge.

    • snark1250 says:

      Disney/Touchstone/Lucasfilm/Marvel has a number of projects due out next year, among them a planned 20,000 Leagues Under the Sea, from David (Fight Club) Fincher, and J.J. Abrams’ re-imagining of Star Wars, which Abrams is filling in the shoes left by George Lucas.

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