DreamWorks Animation will lay off staff in the wake of the weaker-than-expected performance of the studio's Rise of the Guardians and its announcement Tuesday that it will release two films in 2013 rather than three, sources tell The Hollywood Reporter.
The layoffs, which have been rumored for weeks, are expected to hit the Glendale-based animation studio's production, technology and overhead functions. Sources say no single film project in development will be targeted, though DreamWorks Animation CEO Jeffrey Katzenberg said in a statement Tuesday that the Kate Hudson-Josh Gad-voiced Me & My Shadow, which had been slated for release by Fox in March 2014, is being taken off the schedule indefinitely. Mr. Peabody & Sherman, which was set for a Nov. 1 release, will now shift to the March 7, 2014 slot.
"The move of Mr. Peabody & Sherman means that we will now release two films in 2013, and we are adjusting our operating infrastructure costs accordingly," Katzenberg said in a statement.
A DreamWorks Animation spokesperson declined to comment on whether layoffs will happen. But sources say plans for an unspecified reduction of the company's 2,000 or so employees already are afoot and should begin before the publicly-traded studio reports earnings on Feb. 26.
Guardians, released in the U.S. in November, grossed nearly $300 million worldwide in theaters but was considered a box office disappointment due to its high production and marketing costs. Lazard Capital Markets analyst Barton Crockett predicted in January that the studio will be forced to write down as much as $96 million in Guardians losses. DWA stock consequently has been pummelled by investors.
The trouble comes as DWA in August entered a five-year distribution deal with Fox, which will release its films globally beginning with The Croods on March 22. Turbo will follow on July 19, then Mr. Peabody & Sherman, How to Train Your Dragon 2 on June 20, 2014 and Happy Smekday! on Nov. 26, 2014.
Kim Masters contributed to this report.