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Warner Bros. Will Cut Costs by $200 Million Annually, CEO Says

Warner Bros. will cut overhead by $200 million annually, the studio’s chairman and CEO Kevin Tsujihara said during a presentation to Time Warner investors on Wednesday.

That belt-tightening is expected to include layoffs, although the studio chief did not say how deep the cuts in staffing will be.

“We have committed to cutting costs significantly,” said Tsujihara.

Sources tell Variety that Warner Bros. is expected to cut as many as 1,000 jobs worldwide or 10% of its workforce. The studio chief said the company has done a comprehensive company-wide review and is looking for efficiencies in areas such as marketing, where the company spends more than $2 billion a year, and distribution, where digital conversion from film is reducing costs.

“This will allow us to expand margins and to invest in the high growth areas for upside,” said Tsujihara.

The new savings will be used to drive an ambitious film and television slate that includes an array of sequels and spinoffs to its DC Comics, Harry Potter and LEGO franchises and to forge a tighter partnership with corporate siblings Turner and HBO.

Over the next six years, DC will release “Batman V. Superman: Dawn of Justice,” “Suicide Squad,” “Wonder Woman,” two “Justice League” movies, “Aquaman,” “Shazam,” “The Flash” and is working on a “Green Lantern” reboot, “Cyborg” and stand-alone Batman and Superman movies. The Warner chief said that key talent has already been lined up for these projects, noting that Zack Snyder will direct both the Batman and Superman matchup and the Justice League movies, Dwayne Johnson will star as Black Adam in “Shazam,” Ezra Miller will star in “The Flash,” and Jason Momoa will star in “Aquaman.” The studio also expects “four A-list” actors to anchor “Suicide Squad.”

Tsujihara also expressed high hopes for the return to the fantasy world of “Harry Potter” with the upcoming series “Fantastic Beasts and Where to Find Them.” Author J.K. Rowling will handle script duties and David Yates, who oversaw several previous Potter installments, will direct. The Warner chief said the films will be “at least a trilogy.”

Animation will be a major driver as the studio looks to rebound from a disappointing 2014.  The studio is planning three Lego movies over the next four years, a “Lego Ninjago” movie in 2016, “Lego Batman” in 2017, and “Lego Movie 2” in 2018.

On the film front things have been rocky of late. Despite hits such as “Annabelle” and “The Lego Movie,” it’s been a rough few months for Warner Bros., which has suffered a string of box office duds such as “Blended,” “The Judge” and “Jersey Boys.” The film division is also facing the end of its long-running “The Hobbit” franchise.

“We had a tough summer,” said Tsujihara.

It wasn’t just bad for Warner Bros.  Tsujihara noted that the overall domestic box office was down substantially, more than 15% year-over-year, but argued it was not evidence of systemic threats to business.

“Product played a role in this but we do not feel that this will be a long term trend,” said Tsujihara.

In introductory remarks, Time Warner Chairman Jeff Bewkes indicated Warner Bros. will play a key role in delivering the kind of high quality video content that will allow the media company to compete in the digital age. He predicted that after years of being enervated by declines in the DVD market, the home entertainment business is showing signs of life.

“International box office continues to grow at a healthy pace and the domestic home video market is on the cusp of a return to growth,” Bewkes predicted.

Electronic sales are helping to fill the gap, improving 150% this year, Tsujihara said. He predicted consumer spending would “remain stable.”

Television has been more consistent than film for the studio, with Warner Bros. television arm backing such popular shows as “The Big Bang Theory,” “Mike & Molly” and “Arrow.” Look for cable and premium television production to double over next four years, Tsujihara said.

Corporate siblings Turner and HBO will work more closely with Warner Bros. television group on original programming, including collaborating on children’s programming involving characters as Tom and Jerry and the upcoming futuristic series, “Westworld.”

“Our top priority will be expanding our partnership with HBO and Turner,” said Tsujihara.

The Warner Bros. chief had the unenviable task of following HBO Chairman and CEO Richard Plepler’s announcement that the premium network will directly challenge Netflix by launching a stand-alone online service — a corporate mic drop that sent the streaming service’s stock plunging. But Netflix’s fortunes remain tied to Time Warner’s in symbiotic ways, as well, as the company has become a key buyer for its shows. To that end, Warner Bros. will license all 236 episodes of “Friends” to Netflix in the United States and Canada.

“This is an exciting time in our business,” said Tsujihara. “We’re doubling down on great content, working with the best talent and focusing on our key franchises.”

Correction: An earlier version of this story misspelled the names of Jason Momoa and “Ninjago.”

 

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