Warner Plans Buyouts After Movies' Weak Summer -- but Home Entertainment Holds Up
Time Warner's Warner Bros. unit plans to offer buyouts to an unspecified number of workers as part of a drive to increase profit following a dismal summer season at movie theaters, according to two people with knowledge of the situation.
The Burbank, California-based studio, led by Chairman-CEO Kevin Tsujihara, may fire staff if too few employees take the offer, said the people, who asked not to be identified because the matter is private. Cost cuts at the film, TV and home-entertainment businesses will go beyond personnel, the people said, without being more specific.
Time Warner CEO Jeff Bewkes is pushing division heads to operate more efficiently after rejecting Rupert Murdoch's $75 billion takeover bid and promising investors his standalone growth plan will create more value. John Martin, CEO of the Turner division that includes CNN and TBS, has offered buyouts to about 6% of its U.S. employees.
Mr. Tsujihara, previously head of Warner Bros.' home entertainment unit, took over as CEO of the entire studio in March 2013 after a three-way competition with then-film chief Jeff Robinov and former TV head Bruce Rosenblum. The departure of those senior executives creates opportunities for reducing headcount within the organization, the people said.
Dee Dee Myers, a spokeswoman for Warner Bros., declined to comment. The company employs 7,400 in Burbank, according to the city's Chamber of Commerce.
Warner Bros. operating profit rose 29% to $234 million in the second quarter on gains in home entertainment and TV. Revenue shrank 2.4% to $2.87 billion, reflecting weaker theatrical performance.
Many fans stayed away from the multiplex this season, which still produced the year's biggest U.S. film with the Aug. 1 release of Disney's "Guardians of the Galaxy." The summer total slid 15% to $4.06 billion from a year ago, when summer theatergoing admittedly set a record, researcher Rentrak Corp. said in a statement. That's the least since $3.75 billion in 2006.
Through Aug. 28 this year, the Warner Bros. film studio's domestic box office receipts had dropped 15% to $1.06 billion, according to researcher BoxOfficeMojo.com.
~ Bloomberg News ~