DreamWorks Animation Trims Slate to Two Films Per Year
As part of the restructuring, execs Dawn Taubin and Mark Zoradi are exiting the company and Lew Coleman is retiring.
DreamWorks Animation has announced a restructuring plan for its film business, including trimming its slate to two films a year. As part of the restructuring, marketing chief Dawn Taubin and COO Mark Zoradi are exiting the company and vice chairman Lew Coleman is retiring.
In an effort to bring down costs as it eliminates about 500 jobs — or 18 percent of its entire staff — the studio said Thursday that, beginning in 2016, it will focus its efforts on one original film and one sequel per year.
The newly announced lineup consists of the sequel Kung Fu Panda 3, set for release on March 18, 2016, followed by an original, Trolls, on Nov. 4, 2016.
The following year will bring Boss Baby on Jan. 13, 2017, and The Croods 2 on Dec. 22, 2017. For 2018, the studio has set The Larrikins on Feb. 16, 2018, and How to Train Your Dragon 3 on June 29, 2018.
DreamWorks is outsourcing another project, Captain Underpants, based on the children's novel series by Dav Pilkey, which, it said, "will be produced at a significantly lower cost." It will be released in 2017 and much of the production will take place overseas.
The studio's next film, Home, its one release for 2015, will be released domestically on March 27.
The new slate will be overseen by Bonnie Arnold and Mireille Soria, who were named co-presidents of DreamWorks Animation on Jan. 4 as chief creative officer Bill Damaschke stepped down from his position.
The studio, which in the past few years has beefed up its TV and digital businesses and acquired companies like Classic Media and AwesomenessTV, may have expanded too quickly, given its declining financial performance of late, and CEO Jeffrey Katzenberg acknowledged as much during a conference call on Thursday, promising to spend more of his time on movies.
"We want to get back to basics here and just do an outstanding job on two movies a year," Katzenberg said. "Much of my time and efforts in the last couple years have been focused on expanding the company into these other businesses ... It's now time for me to turn my attention back to the core business."
While DWA's How to Train Your Dragon 2, which Arnold produced, was the top-grossing animated film of 2014, collecting $619 million worldwide, DWA has taken write-downs on recent underperformers Mr. Peabody & Sherman, Rise of the Guardians and Turbo.
On Thursday, Katzenberg said the company will take yet another write-down, this time $80 million, including $55 million mostly due to weak results for Penguins of Madagascar, though some of that is also related, again, to Mr. Peabody & Sherman.
Katzenberg also said the company's studio in Northern California will be shut down and consolidated onto its Glendale campus and about half of the "key talent" there will be offered the opportunity to move to that area.
"While I couldn't be more confident for the future, I'm deeply saddened by the fact that we'll be losing so many treasured, loyal, inspired and valued members of the DreamWorks Animation family," Katzenberg said.
The CEO also said the studio plans to spend about $120 million for the production of each original movie, down from $145 million.
The company, which currently has approximately 2,700 employees worldwide, has been contending with poor financial performance. In its first three quarters of 2014, it posted a 10 percent decline in revenue to $450.4 million and a net loss of $46.4 million compared with a profit of $37.9 million a year prior.
Reflecting the poor financial results, the company's stock has fallen 39 percent in the past 12 months, though shares rose 3 percent on Thursday and an additional 3 percent after the closing bell when the restructuring was announced.
As a result of reducing its feature film production, which will result in the loss of 500 jobs across all divisions of the company, DWA said it expects to incur a pre-tax charge of approximately $290 million, about $60 million of which will go toward severance payments and charges associated with moving employees to Glendale.
"This consolidation will not only lower our cost structure, it will foster better collaboration, maximizing creativity while also driving efficiency," Katzenberg said.
With the restructuring, the studio should save about $30 million this year and about $60 million annually by 2017, executives said Thursday.
The restructuring comes after negotiations to sell the studio did not yield results. Katzenberg had merger discussions with Japanese telecommunications firm SoftBank, toymaker Hasbro and conglomerate 21st Century Fox.
The company hired Zoradi, a former president of the Walt Disney Studios Motion Picture Group, in July, and Katzenberg addressed his decision to let the COO go after a mere seven months on the job.
'We were top-heavy," Katzenberg said. "We have too much corporate staff here."
After the layoffs, DWA will employ about 2,200 people worldwide.