Time Warner’s Cost-Cutting Ax Falls on Warner Digital Studios

Warner Digital Studios, Warner Bros.’ 2-year-old digital-effects house employing about 150 people, is closing following completion of work on “Batman and Robin.”

Warner Bros. confirmed the shuttering of the Burbank unit, the latest in a number of cost-cutting measures following Time Warner Inc.’s $7.5-billion acquisition of Turner Broadcasting System Inc. Castle Rock Entertainment this week announced it was trimming its ranks by about 60 people, nearly half its staff.

In some cases, people whose positions have been eliminated have been offered other jobs within Time Warner. Warner Bros. said it is trying to help Digital Studios employees find other positions in the visual effects industry.

Warner Bros.’ exit from the industry underscores the difficulties studios face in entering it. Within the last two years, most of the studios have either started their own operations (Warner Bros., Sony) or bought existing effects houses (Disney, 20th Century Fox, DreamWorks SKG).

“It’s hard to force directors and producers to go to your in-house facility. They already have their own relationships,” said Ray Scalice, general manager of effects house Pacific Title Digital and a former Disney effects executive.

Scalice said profit margins are generally tight in the business and that on big “event” pictures, an effects house often has to subcontract elements of the work. Warner Bros. said in a statement that the cyclical nature of the business makes it “difficult to anticipate long-term staffing, technical and equipment needs on upcoming movies while maintaining a highly competitive facility.”