DreamWorks Animation Cutting 500 Jobs; Dawn Taubin and Mark Zoradi Exiting

Dreamworks Animation

DreamWorks Animation is cutting approximately 500 jobs across all locations and divisions of the studio as Jeffrey Katzenberg looks to turn the company’s projects and profit margins around after a string of disappointments at the box office.

The company will now also cut back its feature film output from three to two movies a year, with plans to release a sequel and an original title in 2016, 2017 and 2018.

As part of the company re-organization, DreamWorks Animation marketing head Dawn Taubin and chief operating officer Mark Zoradi are departing, while Lew Coleman is retiring as vice chairman. Bill Damaschke, DWA’s chief creative officer, had already stepped down.

The company will focus on six specific movies for the next three years: “Kung Fu Panda 3” (March 18, 2016), “Trolls” (Nov. 4, 2016), “Boss Baby” (Jan. 13, 2017), “The Croods 2” (Dec. 22, 2017), “Larrikins” (Feb. 16, 2018) and “How to Train Your Dragon 3,” which was originally slated for 2016 before being pushed back to summer 2017, and has now received a June 29, 2018 release date.

“B.O.O.: Bureau of Otherworldly Operations” has been put back into development, as has “Mumbai Musical.”

DWA chief Jeffrey Katzenberg said he will take a more hands-on role in how the studio’s films are developed and produced.

“My time and my focus needs to be on making blockbuster films,” Katzenberg said during a call with analysts after announcing the re-org. “We have the people to do it. That’s where my energy is going to be focused.

“Feature animation is the core of our company. Getting our feature film business back on track is our number one priority.”

Katzenberg said that making three films per year was “too ambitious. I want us to get back to making two great blockbuster films a year. We want to get back to basics here.”

The job loss figure is significantly higher than the estimate of a workforce reduction in the 150 to 400 range that emerged Monday. The layoffs began last week.

Zoradi had joined DWA just seven months ago. “Given that we’re narrowing the focus of the company over the next two to three years, we’ve tried to bring our executive suite in line with a more focused agenda for the company,” Katzenberg said during the call with analysts, adding that Zoradi had volunteered to leave the company, given its new strategy.

“I think we were top heavy and given that we are right sizing the entire operation and focusing the company on the businesses we are in today, rather than businesses we imagined we might be in, this is the right sizing that we need,” Katzenberg said.

The studio said Thursday it expects to incur a pre-tax charge against earnings of approximately $290 million in connection with the restructuring and related items. The cost-cutting is expected to save DWA $30 million in 2015, and $60 million by 2017.

Budgets on its films will be reduced to $120 million, starting with “Trolls,” out in 2016.

Its northern California studio, PDI/DreamWorks, also will be shuttered, with staff there offered the chance to move to DWA’s headquarters in Glendale, Calif. PDI/DreamWorks, which had operated as a visual effects studio under the Pacific Data Images name before DWA acquired it in 2000 to produce animated films, was behind the three “Shrek” films, “Madagascar: Escape 2 Africa,” and its third installment, “Mr. Peabody & Sherman” and “Penguins of Madagascar.”

PDI/DreamWorks did work on the “How to Train Your Dragon” franchise but was not the lead animation studio on the films, whose work was mostly done at DWA’s Glendale campus.

DWA also said “Captain Underpants” will be produced outside of the studio’s pipeline “at a significantly lower cost” with a 2017 release. The company’s only 2015 release is “Home,” which will open domestically on March 27.

The layoffs at DreamWorks Animation are the first to take place under the new leadership of Bonnie Arnold and Mireille Soria as co-presidents of the studio’s feature division.

Arnold and Soria were tapped co-presidents on Jan. 4. The two had been taking a close look at the types of films with which the studio will move forward, reducing production budgets and other overhead at the company.

DWA took an $87 million loss on “Rise of the Guardians,” a $13.5 million hit on “Turbo” and a $57 million writedown on “Mr. Peabody & Sherman.”

“Three of our last four films have not delivered in terms of audience turnout or financial performance,” Katzenberg told analysts in April 2014, before “The Penguins of Madagascar” also underperformed in the latter part of the year, with nearly $271 million worldwide, $78 million coming from domestic theaters.

Both “Kung Fu Panda 3″ and “B.O.O.: Bureau of Otherworldly Operations” were moved out of 2015, with the latter not yet landing on a new release date.

DWA employs around 2,200. The last major staff cut came in 2013, when DWA pulled the plug on “Me and My Shadow” and shifted release dates for its films, moving “Mr. Peabody & Sherman” to 2014, resulting in more than 350 pinkslips.

The studio enjoyed a now-brief morale boost when “How to Train Your Dragon 2″ was nominated for an Oscar in the best animation picture race, just after winning the Golden Globe in the same category.

DWA made the announcement of the re-org after the stock market closed. Wall Street reacted fairly to the news, with the company’s stock rising more than 3% in after-hours trading.

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  1. Anonymous says:

    Trolls an “original” film

  2. Businesses should always cover their budgets with proven products that works. Experiment with increasing major volume and new products outside the “base budget” and do with caution, slow enough to protect the “base”…

  3. Pixaresque says:

    Anytime you need to layoff this many people in one sitting shows there is troubled leadership within the company. Either JK is being misled by Ann and others, or his head was in the sand. Either way, if I were an investor, I would run for the hills. Warning signs two years ago with smaller layoffs and now a huge jolt. He didn’t course correct enough two years ago and odds are, his loyalty to his under-performing leadership will get him again. This is sad for the industry as a whole and those who worked so hard and still lost their jobs.

  4. Aaratosm says:

    First executives give themselves huge pay increases. Then the company does not meet targets. Then layoffs happen. If anyone thinks we don’t need caps on executive pay, you’re being naive.

  5. Correction: There were four Shrek films. Regrettably.

  6. guest says:

    Mr. Katzenberg, you remember Spirit yes? That is an animated masterpiece as far as me and my daughters and all her friends are concerned. My younger daughter loves it and still plays the soundtrack and her art teacher plays it every year! Please get back to making animated works and films like this with the quality and enduring qualities. Thank you.

  7. Dale says:

    A bit of greed kicked in after the success of Shrek and Dragon. Instead of focusing on quality, it appears that Dreamworks tried to make more films more quickly. The storywriting went downhill and that was reflected in box office sales.

    Dreamworks, please continue to make visually beautiful and well-written movies like the Dragon series. Hire better writers. Don’t rely on action sequences to make a “good” film. Show the full range of human ethnicities, with all their glorious differences. Give the characters believably real feelings which grow out of what the audience sees happening in the story, not just schmaltz.

    Also, please consider making ALL your films in the United States. There’s a Buy-in-America trend right now which you could use to your advantage in PR. I recognize that outsourcing saves money, but keeping the money in the USA ultimately helps every American.

    • Sarah says:

      This, exactly. The fact that they want to outsource is INCREDIBLY disappointing. I have been a fan of this company for a while, but if they pull the shady business tactic of moving their jobs overseas, especially when it’s so hard to find work (and even more so for animators and artists), it’ll really turn me off from wanting to continue to support them as a company.

      • matteobject says:

        It’s worth noting that when they mention outsourcing, they aren’t talking about sending the jobs to countries with cheap labor like India or China, they’re talking about sending the jobs to Canada, because Canadian taxpayers have been conned into heavily subsidizing US film production.

  8. preuser says:

    Lay off a few more next year then again in 2017 and then just make political satire and derogatory animated cartoons about Islamic prophets , mullahs and jihadists !

  9. boo says:

    one of the reasons, kungfu panda 3 went to china…

  10. Alex says:

    Does this now make them an evil corp that doesn’t care about the little guy, just the bottom line? You’d think Katz was a Republican.

  11. ambergate1 says:

    Says a lot about recent attempts are finding strategic financial partners. Perhaps this leaner, meaner studio will have a better chance at getting help.

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