Jeffrey Katzenberg on DreamWorks Animation's 'Very, Very Difficult' Layoffs

2012-40 FEA NextGen Jeffrey Katzenberg H

DWA's chief urges THR’s Next Gen to give back.

The CEO tells THR restructuring was needed after "Rise of the Guardians" underperforms and "Me and My Shadow" is pushed back: "We've never had to lay anybody off … but it's the right thing for us today."

DreamWorks Animation CEO Jeffrey Katzenberg said Tuesday that layoffs already have begun and that 350 of the studio’s 2,200 employees will have been let go by year’s end.

“These things are very, very difficult to do,” Katzenberg told The Hollywood Reporter. “I would say it’s the hardest thing I’ve had to do since we started DreamWorks. We’ve never had to lay anybody off. It was against our culture. But it’s the right thing for us today, and it makes DWA strong going forward.”

Katzenberg said the restructuring was necessary given the disappointing results of Rise of the Guardian and the pulling of Me and My Shadow off the schedule and back into development. Those moves and a few more caused the company to take a $165 million charge, the company said earlier Tuesday.

STORY: DreamWorks Animation Takes $87 Million Charge for 'Rise of the Guardians,' Confirms Layoff Plans

“It’s been very hard. We had 17 hits in a row, and this is the first one that didn’t work for us,” Katzenberg said of Rise of the Guardians. “So it makes you go back and rethink everything, not just the fact that it didn’t work -- certainly we spent a lot of time reflecting on that -- but more importantly saying, ‘Let’s look at everything and say, "What could we be doing better, smarter, more effectively to really position the company in the best possible way gong forward?" ' And that’s what we’ve done, and that’s what restructuring is all about.”

Katzenberg said, however, that the company won’t be downsizing its physical presence, nor will production work need to be further farmed out elsewhere, even though a large portion of the layoffs are coming from production.

“This is really about right-sizing the enterprise here for the productions that we’re doing, so a combination of resetting the scale of what we’re doing coupled with our next-generation animation tools, which are much more efficient and faster and higher quality, is allowing us to scale down the enterprise and maintain the quality.”

Katzenberg also said that, contrary to persistent rumors, DreamWorks Animation is not for sale. He also said cost-cutting measures need not include high-profile voice talent because the top stars are paid based on how well the films perform.

“That’s always been the fantastic way we have compensated the talent in our deals, which is, if we succeed they succeed," he said. "So they work mostly on contingent compensation.”

Lastly, Katzenberg said speculation that Me and My Shadow will never get made also is wrong. “We’ve scaled it back down in order to get it on a development track, so it will be sometime beyond 2014. But no dates,” he said.