Sunday, January 18, 2009

Signs of the Times

There's a cliché that entertainment does well during recessions. It may not decline as much as other industries, but entertainment is not immune in any way from economic contractions. If you read about the film studios in the depression, you'll discover that all of them, except MGM, were in financial trouble in the early 1930s. Paramount was in receivership. Fox was taken over by the smaller Twentieth Century Pictures. There was a revolving door for management at RKO and it was financial desperation, not dedication to the art of film, that caused them to give Orson Welles the freedom that he had on Citizen Kane.

What follows is something of a catalog of the layoffs, dead deals and belt tightening that's currently going on in companies related to animation.

Canadian producer Cookie Jar was to have bought the Care Bears, Strawberry Shortcake and Sushi Pack from American Greetings for $195 million, but couldn't complete the financing due to the credit crunch.

British media company Entertainment Rights is carrying a debt of £125 million and has brought in a company to either restructure it or sell it off. The company controls such properties as Veggie Tales, 3-2-1 Penguins, Casper the Friendly Ghost, He-Man and the Masters of the Universe, Postman Pat, Basil Brush, Fat Albert, Lassie and The Lone Ranger.

Videogame maker Electronic Arts posted a loss of $310 million and will be cutting 6% of it's workforce. The L.A. Times reports that it will cut 10% of its workforce and close at least 9 of it's 50 facilities.

Autodesk, the software firm that makes 3D cgi packages Maya and XSI is cutting 10% of its workforce.

Imagi International, which is working on the Astroboy feature and whose future projects include Gatchaman, Tusker and Cat Tale, has a serious financial problem in that it is underfunded by $45.6 million if it is to complete all of these projects. is reporting that "With the global economic downturn starting to kick in, many [children's] broadcasters are reducing original commissions as ad budgets are slashed." Translation: fewer original series and more re-runs. They also report that 4Kids Entertainment is cutting 15% of its workforce and diversifying into documentaries and teen drama. Translation: animation isn't selling for them.

This is in addition to the closure of Nickelodeon Digital in New York and Laika cancelling a feature in Portland.

Even the optimists are predicting that the news will continue to be bad during the first half of 2009. This blog won't dwell overly much on bad business news, but it has to be acknowledged. At this point in time, no industry is recession proof.

(Thanks to Paul Teolis for many of the above links.)

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