Disney cuts were expected

BURBANK — Walt Disney Corp.’s announcement on Friday that 160 feature-animation employees would be let go due to slowing production schedules in the wake of Disney’s acquisition of Pixar Animation Studios came as no surprise to industry observers.”The management team at Walt Disney Animation has determined that each film will dictate its own, appropriate production schedule,” Disney spokeswoman Heidi Trotta said in a statement. “The result of this necessitated a reduction in staff. As a result, it will be necessary to eliminate a number of current positions.”

Employees will be given 60 days to find new employment once they are informed they will be laid off, she said.

The statement comes less than a month after company officials reported that fourth-quarter earnings increased by 89%, a jump attributed to strong returns from its film, television and theme-park divisions.

And in July, three months before the earnings report, the companyslashed 650 jobs during organizational restructuring, largely a consolidation of its marketing and distribution arms.

But the latest phase of layoffs are not related to rising profit margins and are connected to the effects of the Pixar acquisition, said Jack Kyser, the Los Angeles County Economic Development Corp.’s chief economist.

“Disney is in a period of integration because they acquired Pixar and the people from Pixar are now in charge of animation,” he said. “And I think they’re just probably going through and doing a review of what they want to put into the production pipeline and focusing on which way they move. It’s just like a big corporate merger, sooner or later — regardless of what people say — there are always lay-offs.”

Disney’s announcement reflects the larger success and business opportunities furthered through the Pixar acquisition, said Gary Olson, executive director of the Burbank Chamber of Commerce.

“This was anticipated with the merger with Pixar,” he said. “In the total scheme of things, this is not going to be a real negative impact at all. Really it’s viewed more as a positive because of the Pixar affiliation.”

Though Disney is riding strong profit figures, the feature-length animation field has begun to heat up, as other studios enter the market, Kyser said.

“The good news for Disney is that there is record profits … but for animation, the competitive field is getting much more competitive.”

Warner Bros., a studio also in Burbank, has recently delved into computerized animation with the release of the wildly successful “Happy Feet,” Kyser said.

Entertainment industry observers are keeping an eye on upcoming contract negotiations, which could also make significant impacts on studio labor force, Kyser said.

In October 2007, the Writer’s Guild contract will expire and, in June 2008, the contract for both the Director’s Guild and the Screen Actor’s guild is up, he said.

“The next couple of years are going to bring a lot of important labor contracts,” he said.