Burbank Bloodbath: 5% of Studio Wiped Out Warner’s post-Halloween Massacre

Both the L.A. Times and Variety offer gorily detailed coverage of the 250-300 or so souls caught up in Warner Bros. studio blood-letting.

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Here’s what’s missing, though: The plan executed by Warner’s entertainment CEO Barry Meyer illuminates some terribly interesting tactical and strategic quandries facing not just the town’s biggest studio, (owned by the world’s largest media company) but the entire entertainment industry.

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(Above: Warner Entertainment CEO Barry M.Meyer, and Michael Myers, no relation.)

Strategically, the studio must confront a DVD business that’s facing a significant deflation in growth, as techie nerds and cinephiles have mostly rounded out their DVD collections, and more casual shoppers express less and less enthusiasm for owning the entire fifth season of “Gilligan’s Island.”

More, in the last two months, Hollywood’s actors’ and screenwriters’ unions have gotten extremely militant about securing a hefty increases in DVD: Both guilds elected new, hardliner presidents who’ve fired their respective chief negotitors with a pledge to wade in blood to get a bigger share of the DVD profits.

Tactically, too, Warner’s is at a cross-roads about how it’s it’s going to pay for it’s movies, and how it’s going to get content. Big-budget action movies are just too risky to pay for outright and the studio isn’t adroit at releasing smaller, specialized stuff, so it’s more dependent than ever on DVD to cover its financial downside.


Let’s first deal with the DVD side of things. All the studios have made a mess of the roll-out of a new DVD format – high definition DVD – that was suppossed to be in stores this Christmas just in time to energizeflagging home video growth.

Instead, high def DVDs won’t arrive ’til late next year at the earliest, many say.

Along the way, Warner’s executive behavior didn’t help matters. Its cantankerous head of home video, Jim Cardwell, was fired last month, and the company brought in a big-thinker to address strategy and mend fences with Sony’s Blu-ray folks. With Sony to a have seemingly prevailed in its desperate fight with Toshiba’s rival HD-DVD format (which Warner’s had been backing), Meyer and his team recognized they needed to make friends fast, or risk being left out of the next DVD boom.

The New York Times today offers coverage of Toshiba’s last ditch effort to enlist the Chinese to save their bacon.

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The truly macabre thing in all this? The Warner Bros. cuts are NOT a reaction to bad quarterly numbers. Time Warner actually reported an 80 percent rise in third-quarter earnings, per Business Week.

And yet, some Warner departments told to reduce their budget; even successful (of late) Warner Independent was “asked” to lop off 10%.

This brings us to a final tactical question: With the specialized film business performing so well in recent years (viz, Fox Searchlight) why get rid of a well-respected exec like Warner Independent’s Michael Andreen? Because despite WIP president Mark Gill‘s recent success with “March of the Penguins,” Warner Entertainment appears terrified of letting its indie division greenlight its own pictures. The result? WIP is left to vaccuum up acquisitions at festivals, and a theatrical production exec like Andreen is left with nothing theatrical to produce.

Merry Christmas, loyal employees!