Looking to cut overhead and operating expenses after the recent departure of DreamWorks co-founder Steven Spielberg, Paramount Pictures plans to release fewer films, consolidate operations and slash 25 jobs among those DreamWorks employees who remain.
Paramount's management is under heightened pressure from corporate parent Viacom Inc. to continue finding efficiencies at the studio amid a tough economic climate and the increasingly profit-challenged movie business. Like other media companies, publicly traded Viacom, controlled by billionaire Sumner Redstone, has seen its stock price pummeled in the global economic meltdown.
"We want to be as profitable as we can and meet the Viacom financial targets," said Paramount Chairman Brad Grey, who said streamlining the DreamWorks operation would save the studio $50 million in overhead. "We are operating the company as lean and as prudently as possible."
This summer, Paramount eliminated about $10 million in costs at its specialty film unit, Paramount Vantage, by laying off dozens of employees and absorbing the unit's marketing, distribution and physical production divisions into the bigger studio.
Now that Paramount's separation agreement from DreamWorks principals Spielberg and Stacey Snider has been completed, Grey and Paramount Vice Chairman Rob Moore said they could begin implementing their long-contemplated plans to downsize the remaining DreamWorks operation and integrate some of its key functions, as well as pare down the number of movies Paramount releases each year.
Just as it did with Vantage, Paramount will now take over the physical production, business affairs and other operating functions that were previously handled separately by DreamWorks.
DreamWorks will continue to maintain its own creative staff under production president Adam Goodman, but it will be dramatically smaller than the 150 employees the production company had the last three years under Spielberg and Snider.
Spielberg and Snider have told Paramount that they plan to eventually take about 100 employees with them to their new studio, which has financial backing from India's Reliance ADA Group and a distribution pact with Universal Pictures.
"About 25 people will end up with jobs and another 25 will be let go," Moore said.
The job cuts will be implemented in about a month, the company said.
Goodman will oversee DreamWorks' existing pipeline of about 100 active development projects and will work on developing new projects for Paramount.
That includes 35 projects that Paramount has the option to co-finance and co-distribute with Spielberg and Snider's new studio and distributor Universal.
Meanwhile, Paramount's production president, Brad Weston, will continue in his role supervising the bigger studio's creative staff, talent deals and development projects.
Without DreamWorks' annual contribution of four to six movies, Paramount will pare its annual releases to about 20. Of those, a dozen will be produced by Paramount and its MTV Films and Nickelodeon Movies labels.
Paramount Vantage will supply up to four movies, with a new strategy to make and acquire edgier, lower-cost movies of all genres costing less than $15 million to produce. An additional two to four releases will be produced by DreamWorks Animation and Marvel Studios, both of which have long-term distribution deals with Paramount.
Grey said he would continue looking to economize "in every way and will not spend excessively in any area."