Lions Gate Entertainment, which is enjoying a wild ride with its “Saw” franchise and its Emmys for “Mad Men,” announced Friday that it was laying off 8% of its workstaff across the board,including production, television, home entertainment, business affairs and legal.
Out of a workforce of 550, the Santa Monica-based studio eliminated 41 positions. The layoffs should save the company some $10 million annually, out of its $140 million overhead.
The moves may come as a treat to corporate raider Carl Icahn, who recently bought about 9% of the company, which many on Wall Street felt as an overture to an corporate raid on the company. Icahn has said he thought Lions Gate was undervalued and could perform better.
The Los Angeles Times take from reporter Claudia Eller on Lions Gate’s woes is below:
As the economic downturn continues to sweep across Hollywood, Lions Gate Entertainment is eliminating 41 positions, slashing 8% of the 550-strong workforce at its Santa Monica-based independent movie and television studio. Seventeen employees were handed pink slips this morning across all divisions of the production and distribution company, including motion pictures, television, home entertainment, business affairs, finance and legal. The other 24 positions being eliminated are currently unfilled. A spokesman for Lions Gate, producer of the successful “Saw” movie franchise and the popular cable TV series “Mad Men” and “Weeds,” confirmed the cutbacks but declined to comment further.
Lions Gate’s headcount reduction and related cost-saving measures are expected to save the studio about $10 million in annual overhead, which is currently $140 million. The layoffs are part of management’s continued effort to slash costs at the studio, which instituted a hiring freeze this summer and a month ago dispensed with its longtime Monday morning free breakfast buffet for employees.
Over the last three years, Lions Gate’s staff has grown from 350 to 550, in large part because of its acquisition of the production outfit Mandate Pictures, TV syndication company Debmar-Mercury, Redbus Film Distributors (now Lions Gate U.K.) and the consolidation of the Toronto-based distributor Maple Pictures.
Even in light of the belt-tightening, Lions Gate’s businesses are continuing to perform well. The studio’s current release “Saw V” has grossed about $64 million worldwide since its Oct. 24 debut. The “Saw” franchise has blown past other long-running horror series, including “Friday The 13th,” “Halloween” and “The Nightmare on Elm Street” to become the highest-grossing horror series of all time, with more than $550 million in global ticket sales. Lions Gate’s AMC series “Mad Men” recently won the Emmy for best drama.
Amid the current fiscal crisis, Lions Gate is the latest entertainment concern to tighten its belt and brace for an expected steep decline in consumer spending and advertising. NBC Universal is planning to slash $500 million, or 3%, of its $16.7-billion annual budget by cutting staff, promotional expenses and discretionary spending on travel and entertainment. NBC Universal’s Spanish-language TV division, Telemundo, also said it plans to reduce its workforce by 5% in the anticipation of an advertising slowdown.
The Walt Disney Co., which Thursday reported a 13% drop in earnings for its fiscal fourth quarter, is contemplating a range of belt-tightening measures, including layoffs across its Burbank movie and TV studio, its ABC Network, cable channels and theme parks.
Publicly-traded Lions Gate will announce its second-quarter earnings Monday.