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Layoffs to Hit Disney’s Maker Studios (EXCLUSIVE)

Layoffs are coming to Maker Studios, the multichannel network recently acquired by Walt Disney Co.

Approximately 10% of the 380 employees are expected to be pink-slipped as early as this week, according to sources inside the Los Angeles-based firm.

A rep for Maker issued a statement to Variety but declined to elaborate further. “Maker’s business is constantly evolving, and we routinely reassess our internal resources and make strategic adjustments, reducing staff in some areas while actively hiring in others.”

What is prompting the layoffs, which have yet to be announced to the company’s employees, isn’t clear. Cost-conscious Disney could be looking to trim any excess bloat on an expensive acquisition. It’s also possible select positions becoming superfluous thanks to newfound synergies with an owner looking to make its mark on Maker.

Disney may not be that much of a factor at all in the layoffs considering Maker is hardly the only MCN out there forced to drop employees as they all figure out how to right-size their respective organizations in support of the category’s ever-evolving business models.

That said, Maker is also continuing to add jobs. The cuts are not expected to be concentrated in any one area of the company nor affect top layers of Maker management, which is led by CEO Ynon Kreiz.

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Maker was snapped up by Disney in March in a pact that could cost the Mouse House over $900 million, a sum ultimately to be determined by performance-based earn-out.

This won’t be Maker’s first round of layoffs, having eliminated several dozen positions last year after Kreiz took control of the company. The company has also made other, smaller reductions in the past, such as when it made its own acquisition, online-video hub Blip, last year.

Job cuts are not uncommon in the MCN space due to the combination of monetization challenges endemic to companies subsisting largely on online advertising revenue and the operational struggles of very young businesses. Another leading MCN, Machinima, has undergone several waves of layoffs in recent years prior to new management coming in earlier this year.

Like all MCNs though, personnel cuts are the quickest route to cost control as they manage to keep their burn rates in check. But Maker hasn’t had trouble attracting financing, having raised more than $70 million, including a $26 million series C round last September.

The layoffs may also be indicative of the direction Disney is taking Maker, which will be servicing its new owner as a promotional platform for upcoming Disney properties like “Star Wars” that are seeking younger viewers online.

“We can allow the Maker people to substantially improve the distribution and reach of shorter form video using these characters and stories and add their expertise on the production side,” said Disney chairman and CEO Bob Iger during its first earnings call since the transaction last month.

The company has already been looking to streamline its web properties into a more vertical-centric structure to make for an easier sell on Madison Avenue. Founded in in 2009, Maker claims to have more than 5.5 billion monthly video views and 380 million subscribers across its channels.

Disney did some significant trimming of its own in its struggling Disney Interactive unit in March, eliminating 700 jobs. While Maker is a digital-focused property like many of the acquisitions that have been rolled up inside Disney Interactive, the company remains under the separate oversight of Disney CFO Jay Rasulo.

 

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