WARNER BROS. EXPECTED TO CUT AS MANY AS 1,000 JOBS (EXCLUSIVE)
Claudia Eller and Studart Oldham
Warner Bros. Entertainment is expected to cut as many as 900 to 1,000 jobs worldwide as part of a studio-wide cost-cutting move, according to people familiar with the company’s plans. The estimated reductions would amount to more than 10% of the studio’s 9,000-person workforce.
The cuts will be made in late October or early November.
Senior managers are currently assessing their businesses to come up with ways to trim overhead. Only at the end of that process will an exact reduction figure be known. It could be somewhat lower than the current numbers being speculated, but cuts are expected to be substantial.
“There is no head count target or percentage reduction target,” said Dee Dee Myers, Warner Bros.’ new executive vice president of corporate communications. “This is a budget issue, not a head count issue,” she added.
In a Sept. 4 memo to staff, Warner CEO Kevin Tsujihara warned that layoffs were coming at every level of the studio but did not disclose which of the divisions — including film, TV and home entertainment — would be hit the hardest. Inside sources said that the movie and TV production units will be least impacted as Warner Bros. plans to continue its priority of investing in content and in fact wants to increase the studio’s output. Home Entertainment, marketing, distribution, administration and other non-production related divisions are expected to take the brunt of the layoffs, they said.
“Since I became CEO, I’ve been working with the Studio’s senior management team to create a plan to position Warner Bros. for future growth,” Tsujihara told employees in his email. “This will require us to reduce costs and reallocate resources to our high-growth businesses.”
The last major wave of WB layoffs came in 2009 when the studio slashed 800 jobs.
Warner Bros., which has been the most consistently successful among the Big Six studios in recent years, has had a number of major box office misses in 2014 including “Transcendence,” “Winter’s Tale” and “Edge of Tomorrow.”
Additionally, the Wachowski siblings’ $150 million sci-fier “Jupiter Ascending,” starring Channing Tatum, was yanked out of its original July 2014 release slot less than two months before its opening in order to complete its special effects and address other issues that were reflected in the film’s weak tracking.
Recent box office hits include “The Lego Movie” and a reboot of “Godzilla,” of which WB only had a 25% stake, and the studio has several high-profile releases lined up, including “Horrible Bosses 2″ in November and the third and final “Hobbit” movie this coming December. Future tentpoles include “Batman v Superman” and other DC superhero films, and J.K. Rowling’s Harry Potter spinoff series “Fantastic Beasts.”
WB is also credited with such popular TV shows as “The Big Bang Theory,” “Mike & Molly” and “Two and a Half Men.” The TV studio is placing a big bet on its Batman prequel “Gotham,” which debuts on Fox next Monday and was already sold to Netflix.
The sizable cuts at Warner Bros. arrive as parent company Time Warner faces severe pressure from Wall Street and investors to reduce costs after spurning Rupert Murdoch’s $80 billion recent takeover bid. The stock, which had jumped above $87 a share after the offer was unveiled on July 16, plummeted to $72 a share following the Aug. 5 withdrawal by Murdoch. It closed at $76.86 Wednesday and is up 13% for the year.
Time Warner CEO Jeff Bewkes told media analysts that Fox’s rejected bid, which would have created a media powerhouse that generated $65 billion in revenue, “just didn’t make sense.” At Goldman Sachs’ Communacopia conference last week, he acknowledged, “We do think there was a fair amount of risk in taking on that size of combination.”
All of Time Warner’s operations are undergoing top-to-bottom internal reviews, including HBO, one of the media giant’s most lucrative businesses, say sources close to the matter. However, Bewkes dismissed the notion that Time Warner is considering spinning off the pay TV giant as a separate company or trading stock.
Other Time Warner holdings under the microscope include Turner Broadcasting, which began offering buyouts to between 500 and 600 of its U.S. employees last month. Turner owns CNN and TBS, among other networks, and is expected to make a decision on how many positions it will eliminate once the buyout process is complete.