Analysts: Disney layoffs tied to Lucasfilm, Marvel acquisitions
Walt Disney Co. has begun the process of laying off about 150 people who work at the company’s movie studio.
Analysts said that the layoffs, which were confirmed by the Burbank-based company Wednesday, are probably related to redundancies created by Disney’s recent acquisitions of Marvel Entertainment in 2009 and Lucasfilm in 2012.
“I am sure there is some overlap from those acquisitions,” said Disney analyst Harold Vogel, president of Vogel Capital Management.
The cuts, which are expected to affect the studio’s marketing and home entertainment divisions and possibly other areas, are believed to be the result of an internal corporate review initiated by Disney Chief Executive Bob Iger.
“As part of an ongoing review to ensure that the studios’ operational structure and economics align with the demands of the current marketplace, we have made the difficult decision to reduce our staffing levels in several divisions of the studio,” a Disney spokesperson said in a statement.
Disney declined to comment on the specific number of personnel affected. According to a 2012 filing with the Securities Exchange Commission, the company had 166,000 employees at the end of its last fiscal year.
Disney’s studio had a hit this year with “Oz the Great and Powerful,” which so far has grossed about $454 million worldwide. Its remaining 2013 in-house, live-action releases are Johnny Depp’s “The Lone Ranger” and Tom Hanks’ “Saving Mr. Banks,” which is about company founder Walt Disney and the making of the classic “Mary Poppins.”
Several of Disney’s upcoming biggest projects are being made by units like Marvel Studios, producer of “Iron Man 3,” which will be released May 3. Also forthcoming this year is Disney subsidiary Pixar’s “Monsters University,” which is set for release June 21. And the acquisition of Lucasfilm would allow Disney to release a stream of “Star Wars” films made by that newly-acquired company.
Analyst Doug Creutz, who covers Disney for Cowen & Co., said it makes sense that Disney would reduce overhead at its studio now that the company is releasing fewer homegrown movies and relying on other divisions to supply content.
“It has been a segment where the performance has been choppy for a while and they are looking for ways to improve,” he said. “They are looking to get down to a small number of focused bets in that business and therefore you may not need as much overheard to do that. Particularly when a lot of your big bets are coming from Marvel and Lucasfilm.”
On April 3, Disney’s Lucasfilm subsidiary announced that its video game unit, LucasArts, would no longer develop games. As a result, the company said there were “layoffs across the organization,” though Lucasfilm did not say how many employees at San Francisco-based LucasArts would be affected.
Disney’s stock closed at $60.11 on Wednesday, not far from its all-time high of $60.14 set earlier in the day.
The company will release its second-quarter earnings May 6.
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