Burbank-based Walt Disney Co. announced late Thursday that its third-quarter earnings were down 26% from a year ago, in the latest news of declining profits for local entertainment industry giants.
The companies suffered from multimillion-dollar losses from falling DVD sales, box office figures and advertising revenues. Disney also recorded lower earnings from its parks and resorts division.
The latest round of bad news from two major industry players was not expected to significantly affect local studio vendors who've already been languishing under a depressed economy and constricted production schedules.
Neither studio has expressed plans to cut back on their productions or employment and have maintained that their results for the quarter, when considering the challenges of the economic slowdown, have been strong.
Although their low earnings do not signal a change in industry hiring trends, the studios may see some growth in profits by the end of the year as recent box office numbers indicate that consumers may be more open to spending, experts and executives said.
The companies are not expected to lay off more workers because they have already trimmed staffs considerably since the start of the recession, said Don Nakamoto, labor market specialist for the Verdugo Workforce Investment Board.
Warner Bros. trimmed its global workforce by 800 jobs and Disney's ABC Television division reduced its staffing by 400 at the start of the year.
â€œWhen the problems first started, in terms of lost ad revenue and DVD sales declining, and other things that were really hitting the entertainment companies, they started laying off some pretty big numbers,â€ Nakamoto said. â€œI think I'd be surprised if they came back with some additional layoffs at this point.â€
Still, the occurrence of â€œrunaway productionsâ€ and other cost-saving efforts will likely not be reduced as the companies measure their earnings.
Major studios, in light of their struggles during the recession, have aimed to cut costs by locating productions in other states or countries where filming expenses are lower because of tax incentives.
The popularity of out-of-state productions has drained employment opportunities from the area, said Stephen Coffey, acting business agent for Burbank's chapter of the International Alliance of Theatrical Stage Employees.
Although the studios' struggles have matched industry-wide trends because of the recession, their concentration on increasing efficiency has affected local workers, Coffey said.
â€œIf they're down that means we're down as well,â€ he said. â€œBecause that means they're not hiring and they're not shooting as many shows.â€
Disney's revenues for its studio entertainment division were down 12%, to $1.3 billion. Its media networks division was off the mark by 2% from a year ago, to $4 billion, and its parks and resorts revenues fell by 9%, or $2.8 billion.
Earnings for AOL Time Warner's filmed entertainment division fell 9% from last year, to $2.3 billion.