Two top executives are leaving and 500 employees are being laid off at DreamWorks Animation SKG after yet another poor box office showing, the studio disclosed in a regulatory filing on Thursday.
The downsizing will force the Glendale studio to take a pretax restructuring charge of $290 million primarily in the quarter ended Dec. 31, with the remainder spread out over this year and next. About $60 million of the $290 million charge is related to severance, benefits and other obligations to employees.
The studio also at the same time announced the departures of Chief Operating Officer Mark Zoradi and Chief Marketing Officer Dawn Taubin, who will be leaving by March 31. Zoradi only joined DreamWorks in July, while Taubin became marketing head in August 2013.
The filing also said that the company’s vice chairman, Lewis Coleman, would be stepping down from its board by Jan. 30.
DreamWorks also expects a $55 million write down for the fourth quarter related to “Penguins of Madagascar,” its latest film, and “Peabody and Sherman,” released last spring.
Additionally, the studio plans to cut its film output to two films a year from three.
There had been media reports of impending layoffs at the studio, but the exact figure was unclear. The company employs about 2,200 workers in Glendale and Redwood City, and the layoffs affect almost a quarter of its workforce. They will take place across all locations and divisions.
Chief Executive Jeffrey Katzenberg said the restructuring will deliver better box office results and growing profitability for all business divisions.
“The number one priority for DreamWorks Animation's core film business is to deliver consistent creative and financial success,” Katzenberg said in a prepared statement.
That financial success, however, has been elusive for the studio, which lost more than $46 million in the first three quarter of last year. That has resulted in the share price falling nearly 40 percent from a year ago.
The studio had a breakout hit with “How to Train Your Dragon 2,” which was released in June and has generated more than $600 million in worldwide ticket sales. But over the last two year the studio has taken write downs on three films – $57 million on “Mr. Peabody and Sherman,” $13.5 million on the summer 2013 release “Turbo” and $87 million on the holiday 2012 release, “Rise of the Guardians.”
Early this month, Katzenberg made other management changes, naming Bonnie Arnold and Mireille Soria as co-presidents of feature animation as replacements for Bill Damaschke who stepped down after serving as chief creative officer since 2011.
The layoffs, charges and management changes were disclosed after markets closed on Thursday.
Shares are up 69 cents, or three percent, to $22 on the Nasdaq exchange in after-hours trading Thursday.
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