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BREAKING: DreamWorks Will Shut Down PDI/DreamWorks Studio; 500 Jobs Will Be Eliminated

BREAKING: The beleaguered DreamWorks Animation just announced in a written statement that it will eliminate approximately 500 jobs at its company, far exceeding the previously anticipated number of layoffs. Many of those five hundred layoffs will come from the unexpected shutdown of one of its main studios, PDI DreamWorks, in Redwood City, California.

The closing of that studio will begin immediately. The studio is expected to begin holding private one-on-one meetings with PDI artists as early as tomorrow, and offering some of them an opportunity to relocate to the southern DreamWorks campus in Glendale, California.

The layoffs at PDI and Glendale will be structured as “equal force reductions,” according to a report by the Animation Guild. That’s possible because of the PDI artists who are being offered the opportunity to relocate. Any artist who leaves the studio will be paid an additional sixty days of wages after the layoff.

The studio is cutting back its slate to two DreamWorks-produced films per year: one original film and one sequel. To save money, the studio will also begin outsourcing production for some of its films, like, Captain Underpants, scheduled for 2017. Films such as that will be produced “at a significantly lower cost.”

Underpants02-580x435UPDATE: DreamWorks Will Outsource Captain Underpants…But Not Where You Think

DreamWorks chief Jeffrey Katzenberg told financial analysts this afternoon that the studio’s attempt to make three films a year was “too ambitious.” He also said that he would become more involved creatively with the studio’s films:

“Much of my time has been focused on expanding the company. It’s now time for me to turn my attention back to the core businesses and support Mireille [Soria] and Bonnie [Arnold, the new DreamWorks feature animation co-presidents]. Much more of my time will be in support to them and less on the road. I remain 100% committed to building DreamWorks Animation. My time and my focus needs to be on making blockbuster hit films. We have the people to do it.”

The new release line-up for DreamWorks-produced films is as follows: Kung Fu Panda (March 18, 2016), Trolls (November 4, 2016), Boss Baby (January 13, 2017), The Croods 2 (December 22, 2017), The Larrikins (February 16, 2018), and How to Train Your Dragon 3 (June 29, 2018). The formerly announced B.O.O.: Bureau of Otherworldly Operations has been taken off the schedule completely and shifted back into development. Another film, Mumbai Musical, has also been put on the backburner.

Among the people who will exit the company: marketing chief Dawn Taubin, vice chairman Lewis Coleman, and COO Mark Zoradi. Zoradi, who joined only last summer, said at the time of his hiring: “I am enthusiastic about the opportunity to join the talented DreamWorks team at a time of remarkable expansion and growth for the company.”

In a written statement, DreamWorks said it expects to incur a pre-tax charge of approximately $290 million in connection with the restructuring. These costs are expected to be incurred primarily in the quarter ended December 31, 2014, with the remainder in 2015 and 2016.  The plan will result in total cash payments of approximately $110 million incurred primarily in 2015.  The restructuring plan is expected to be substantially complete by the end of 2015 and expected to result in annualized pre-tax cost savings of approximately $30 million in 2015, growing to roughly $60 million by 2017.

The extent of the layoffs and the sudden shuttering of PDI/DreamWorks (which started in 1980 as Pacific Data Images) took most of the animation industry by surprise. Artists at PDI reacted admirably, as reported by Kevan Shorey on Twitter:

Industry-wide, however, there was great sadness, shock and disappointment, as expressed on Twitter:

And, of course, there were numerous offers of work for the newly unemployed artists:

(Editorial illustration: boy silhouette via Shutterstock.com.)

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