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Disney film studio layoffs expected soon

June 06, 2011|By Dawn C. Chmielewski

Walt Disney Studios plans to cut as much as 5% of its worldwide workforce as early as next week, according to people with knowledge of the situation who requested anonymity because they had not been authorized to discuss the matter.

The movie studio would eliminate up to 250 jobs from its staff of about 5,000 people globally, the sources said. Several Disney insiders say the bulk of the cuts will be in Burbank.

??????The sources said reductions would hit some divisions -- particularly distribution -- harder than others.

Over the last several years, Walt Disney Co. Chief Executive Robert A. Iger has restructured the studio, scaling back the number of movies it produces and releases. Disney sold off its Miramax Films specialty movie label last year and consolidated the Burbank studio's marketing and distribution operations.

Helping lower its risk on the production side, the studio now relies more heavily on movies supplied by Steven Spielberg's DreamWorks Studios, which pays Disney a fee for releasing its films, and Marvel Entertainment, which it acquired two years ago for $4 billion.

Disney also gets a steady supply of family movies from its Pixar Animation Studios unit, which it bought for $7.4 billion in 2006.

Since he was installed in 2009, Disney Studios chief Rich Ross has been reorganizing and streamlining the studio's marketing and distribution operations in response to falling DVD sales amid changing consumer habits.

Last November, he consolidated the distribution units of theatrical, home entertainment and pay television into a single group headed by Bob Chapek, the studio's former executive in charge of home entertainment.

Falling DVD sales have prompted several studios to cut staffing. Sony Pictures laid off 450 people a year ago, citing changing consumption patterns. Paramount Pictures also is expected to cut costs in its home-entertainment division.

In the first quarter of this year, DVD, Blu-ray and digital movie purchases fell 18% compared with a year ago, according to industry trade organization Digital Entertainment Group. Disney, for the comparable three months ending April 2, reported a 14% drop in home-entertainment revenue.

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