'Peabody and Sherman' push precipitates cost cutting at toon shop
With its immediate workload abruptly lightened, DreamWorks Animation is expected to lay off an unspecified number of employees in the coming months.
The trigger for the job losses has come from Fox’s decision to push the toon shop’s “Mr. Peabody and Sherman” to next year and bump “Me and My Shadow” off next year’s calendar temporarily.
DWA spokeswoman Shannon Olivas declined to comment on reports that several hundred of the staff of 2,200 would be pinkslipped. Many of those are repped by the Animation Guild, which operates as Local 839 of the Intl. Alliance of Theatrical Stage Employees and the guild’s business rep Steven Hulett told Variety that the union began hearing about potential layoffs Tuesday and started holding meetings with members Wednesday about healthcare, pension and layoff questions.
As with visual effects houses, it’s common for animation studios’ payrolls to fluctuate while projects ramp up and wind down, though the potential scope of layoffs at DWA may be a symptom of deeper financial troubles.
Originally dated for Nov. 21, “Mr. Peabody” will now bow on March 7, 2014, through Fox. Also set for 2014 are DreamWorks titles “How to Train Your Dragon 2” (June 20) and “Happy Smekday!” (Nov. 26).
In a Tuesday evening statement disclosing the cost-cutting, DreamWorks topper Jeffrey Katzenberg attributed the layoffs to the calendar shift.
“We believe the best strategy for DreamWorks Animation in the long run is to ensure that every one of our films has an optimal release date with the biggest opportunity to succeed at the box office,” he said. “The move of ‘Mr. Peabody & Sherman’ means that we will now release two films in 2013, and we are adjusting our operating infrastructure costs accordingly.”
But DWA has other reasons to be sweating the bottom line: its most recent release, the holiday-themed “Rise of the Guardians,” was a major disappointment at the box office, with a domestic opening of $33 million over the five-day Thanksgiving frame. Though it’s crept up on $300 million worldwide, analysts have called it one of the company’s most disappointing releases to date, for which Wall Street expects the studio to take a nearly $100 million writedown in the fourth quarter.
DreamWorks Animation stock closed down 67¢, or 3.8%, to $16.75 in trading on the New York Stock Exchange on Wednesday. The issues hit a 52-week low of $16.04 on Jan. 2. The company will report fourth-quarter earnings on Feb. 26.
“Rise of the Guardians” ended DWA’s seven-year distribution deal with Paramount Pictures; the studio now begins a relationship with 20th Century Fox, through which DWA has dated 12 toons through 2016. Fox releases its first DWA film, “The Croods,” on March 22, followed by “Turbo” on July 19.
In an interview with Variety published Nov. 30, Katzenberg was upbeat about the company’s future.
“It’s a very optimistic time for us,” Katzenberg said. “We are going from two movies to three movies a year starting in 2013. Without a question, it’s the most ambitious and exciting slate of movies that we’ve had. I think our best years are ahead of us. We’re excited about the business.”