NBCUniversal to cut 200 jobs in DreamWorks Animation takeover

Less than a month after completing its takeover of DreamWorks Animation, NBCUniversal disclosed that it was eliminating about 200 jobs at the Glendale studio behind such hits as “Shrek” and “Kung Fu Panda.”

NBCUniversal completed its $3.8-billion acquisition of Jeffrey Katzenberg’s DreamWorks Animation late last month.

Analysts had been anticipating the cutbacks, in part, because the Universal film unit already owns the powerhouse animation studio Illumination Entertainment, producer of the highly profitable “Despicable Me” and “Minions” films and this summer’s hit, “The Secret Life of Pets.”

Illumination is known for keeping costs down by relying on its Paris-based studio, Illumination Mac Guff, which benefits from French subsidies. It’s unclear whether Universal might outsource more work from DreamWorks Animation, which also has facilities in China and India.

Universal executives on Thursday declined to specify the percentage of the staff reduction. However, at the end of last year, DreamWorks employed nearly 2,300 people, according to regulatory filings. Assuming that level, the cuts announced Thursday amount to nearly 10% of DreamWorks’ workforce.

“These changes are focused in the corporate overhead groups as well as distribution and consumer products, areas where we can fully integrate operations with NBCUniversal,” Universal Filmed Entertainment Group Chairman Jeff Shell said in an email to employees.

Shell said about 200 positions would be eliminated at the Glendale studio, which sprung from DreamWorks SKG two decades ago and helped transform the animation film business. In recent years, however, the studio has struggled to consistently replicate the success of its earlier films and faced rising competition from Illumination and others.

“These are difficult but necessary moves as we work to integrate our organizations and we will be as generous as possible to those who will be leaving the company,” Shell said.

The layoffs represent the second-biggest job reduction in DreamWorks Animation’s history. Early last year, the studio endured a devastating downsizing, cutting about 500 jobs, or 20% of its workforce, after suffering a string of box-office setbacks. Because the studio released so few films, it was under pressure to churn out blockbusters to please Wall Street.

NBCUniversal paid a significant premium for the boutique studio — $41 a share. “We have very, very high hopes that we did a smart acquisition, and it’s a sign that we are increasingly bullish on our film business,” NBCUniversal Chief Executive Steve Burke said at an investor conference this week in Beverly Hills.

He noted the company could save money by combining the marketing, distribution, finance, legal and human resources divisions of the two entities.

Employees whose jobs are being eliminated will be be notified this week, according to the memo from Shell, who is overseeing the integration. Dozens are expected to remain with the company for a few months as part of the transition.

DreamWorks Animation now is part of NBCUniversal’s Los Angeles film operations, which includes movie studio Universal Pictures, online ticket service Fandango and NBCUniversal Brand Development.

“DreamWorks has a tremendous library of titles like ‘Shrek’ and ‘Madagascar’ and ‘Croods,’ existing intellectual property that can go into new movies,” Burke said during his appearance at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference.

“All of the DreamWorks characters will start to emerge in our theme parks and attractions,” Burke said. “DreamWorks has a very robust television animation business…. We were not in the television animation business, so this now gives us that capability.”

In addition to its small pipeline of feature films, DreamWorks had been particularly successful in building its TV business — a major draw for NBCUniversal and its parent company, Comcast Corp.

Meanwhile, Burke on Thursday retooled his management team that oversees the nuts and bolts of the company’s broadcast TV business.

He gave more responsibilities to one of his most trusted lieutenants, Mark Lazarus, who becomes chairman of NBC Broadcasting and Sports. Lazarus has been in charge of NBC Sports for the last five years.

With the promotion, Lazarus, 53, gains oversight of the NBC broadcast portfolio previously managed by Ted Harbert, a 40-year veteran of the TV business, who is leaving the company. Lazarus will be in charge of television stations owned by NBC and serve as the network’s top diplomat in its relations with affiliated stations. His turf also will include network operations and broadcast standards.

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4:10 p.m. This article has been updated throughout with more information.

This article was first published at 10:35 a.m.