Dark days in Hollywood

January 21, 2009

 If that notion of a recession-resistant entertainment industry hasn’t already been debunked, just get in touch with one of your pals out in Hollywood. They’ll tell you how bad it is — how jobs are disappearing.

Warner Brothers Entertainment is the latest to cut staff, announcing 800 jobs would be lost, or 10 percent of its worldwide staff.  NBC Universal and Viacom have already cut jobs, and industry watchers expect more job cuts to be announced by Walt Disney and Sony Pictures.

Perhaps more than other layoffs, the Warner Bros cuts send a signal of just how bad business look, The New York Times points out.

While not unexpected — Warner had been quietly preparing Hollywood to expect cuts — the layoffs rattled the movie capital because the studio is regarded as one of the industry’s healthiest. With a parade of hits like “The Dark Knight,” “Sex and the City,” “Get Smart” and “Four Christmases,” Warner recorded global ticket sales of $1.77 billion in 2008, up 25 percent from a year earlier.

But DVD sales plummeted in the fourth quarter and orders of scripted television programs — a huge Warner business — are expected to decline as networks cope with tumbling advertising sales. The struggles of Warner’s parent company, Time Warner, in the publishing arena have also put pressure on the studio to increase profitability.

The Wall Street Journal  also notes the challenges faced by parent Time Warner.

The deepening economic downturn has heaped added pressure on Time Warner to cut costs. The company recently announced a $25 billion fourth-quarter write-down to account for the tumbling value of its cable, publishing and AOL businesses, and once again scaled back its advertising outlook.

Warner Bros. was always seen as one of Time Warner’s more bloated divisions, with significant room for trimming and margin improvement. Time Warner’s movie business has already gone through one round of around 300 job cuts last year when Time Warner folded its New Line Cinema unit into Warner Bros. and shut down two boutique labels, Picturehouse and Warner Independent Pictures.

Keep an eye on:

  • Google will halt its Print Ads program on Feb. 28 because the program to help newspapers make more money in online advertising sales was not working (Reuters)
  • Tensions are rising at Sony over a restructuring aimed at cost cutting (FT.com
  • Russian billionaire and ex-KGB agent Alexander Lebedev is buying a majority interest in London’s struggling Evening Standard newspaper for a nominal sum (Reuters)

(Photo: Reuters)

2 comments

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That said, the Indie film distribution business in still one bright spot. I recall that FOX Searchlight, and the other Indie studios, seem to be weathering the storm better than most. Perhaps the industry needs to shift to creating and distributing more documentaries. I recall that “March of the Penguins” had more than a 700+% return on investment.

I loved this movie!!! it was exciting and everything.

Posted by Jackie V | Report as abusive