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Jeffrey Katzenberg's DreamWorks Animation rarely produces flops, but its Rise of the Guardians failed to be a hit last fall. It has forced the studio into a tough financial situation in the fourth quarter and forcing it to layoff hundreds of employees.
According to Businessweek, the studio announced on Tuesday that it took a $82.7 million loss because of the film. Rise of the Guardians grossed just $102 million domestically and was made on a $145 million budget.
Guardians was the only film the studio released this past holiday season, after it pulled Me & My Shadow from its schedule. That film is now slated for release next year.
Dreamworks is the studio behind franchises like Shreck and Madagascar. As The New York Times notes, it thought Guardians could be added to that list, thanks to its use of characters like the Easter Bunny and Santa Clause, but it failed to connect with young audiences. They are now hoping that The Croods, which hits theaters in March, will be a hit and Guardians will be an anomaly.
“We’ve taken this as an opportunity to significantly right-size everything and put it on what will be a better margin and long-term success path going forward,” Katzenberg said during a conference call.
In total, the company will have to take a $165 million charge thanks to Guardians, Shadow and other projects.
According to The Hollywood Reporter, 350 of the studio’s 2,200 employees will be laid off.
“These things are very, very difficult to do,” Katzenberg told THR. “I would say it’s the hardest thing I’ve had to do since we started DreamWorks. We’ve never had to lay anybody off. It was against our culture. But it’s the right thing for us today, and it makes DWA strong going forward.”