Disney Reorganizing Its Sluggish Home Video, DVD Operations

Walt Disney Co. is reorganizing its struggling home video and digital videodisc unit under veteran film executive Richard Cook as part of a larger effort to combine operations to cut overhead in its film group by as much as $30 million, executives said Friday.

The cost cutting is part of an ongoing retrenchment at Disney and other Hollywood studios as they seek to improve their thin profit margins.

Disney has been eliminating overlapping operations and trimming its once-bloated movie slate. Earlier this year, Chairman Michael Eisner, faced with a lagging stock price, issued an edict to cut costs.

Key areas targeted include the international theatrical and home video operations, where Disney executives believe that many marketing and distribution functions overlap.

The restructuring will probably eliminate a number of positions, most of them probably outside the U.S., although the total hasn’t been decided, sources said.

The restructuring, first reported in Friday’s Wall Street Journal, could involve cutting from 25 to 200 positions, Disney executives speculated. But they added that no firm number has been set and that many jobs could be eliminated through attrition.

Disney’s home video unit has been a sluggish performer in recent years. The company specifically cited weak home video sales as one major reason its profit fell 30% in its most recent fiscal quarter.

The video business is usually driven by major children’s hits. In recent years, Disney’s animated films such as “Hercules,” “The Hunchback of Notre Dame” and “Mulan” haven’t sold as well on home video as the huge hits earlier in the decade such as “The Lion King” and “Aladdin.” In addition, Disney has already released the major classic films from its library on video, which boosted profit earlier this decade.

However, its latest animated film, “Tarzan,” opened well at the box office last weekend amid glowing reviews, giving Disney hope that it will eventually become a major hit on video.

A 28-year Disney veteran, Cook, whose title is chairman of Walt Disney Motion Pictures Group, will be given the additional responsibility for Buena Vista Home Entertainment. The job was previously handled by Michael Johnson, who earlier this week was named president of Walt Disney International Asia.