DreamWorks Animation cutting 20% of staff

DreamWorks Animation is cutting 500 jobs, a move expected to cost Jeffrey Katzenberg’s company US$290 million.

As part of plan to significantly reduce the cost of its core animated feature films output, jobs will go across all divisions.

DreamWorks said the cuts would result in pre-tax annualised savings of US$30 million in 2015 and as much as US$60 million by 2017.

The US$290 million pre-tax charge is connected to “restructuring and related items”, the firm said, and will be primarily incurred in the financial reporting quarter that ended on December 31 last year. US$110 million in cash payment charges will come in 2015.

Vice chairman Lew Coleman will retire as part of a move to reduce corporate management staff, with COO Mark Zoradi and marketing boss Dawn Taubin also exiting. Zoradi was only appointed at the end of July last year.

DreamWorks has been on unsteady financial footing after a series of feature films bombed at the box office, though its smaller TV division is performing well.

Yesterday’s move is headlined by a streamlining of movie releases to one original and one sequel. The feature film division got new management earlier this month whenBonnie Arnold and Mireille Soria were appointed co-presidents of feature animation.

Japanese company SoftBank explored a takeover last year but ultimately decided against it, while a proposed merged with toyco Hasbro has been put on hold indefinitely.

“The number one priority for DreamWorks Animation’s core film business is to deliver consistent creative and financial success,” said DreamWorks Animation CEO Katzenberg. “I am confident that this strategic plan will deliver great films, better box office results, and growing profitability across our complementary businesses.”