Disney to Slash 650 Jobs and Cut Yearly Movie Output

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The Walt Disney Co.(DIS) is restructuring its studio division to emphasize blockbuster franchise films over more adult fare, a move that will mean slashing 650 jobs worldwide, the company announced.

Among those who will be losing their jobs in Tuesday's action is Disney's longtime head of live-action production, Nina Jacobsen.

The restructuring will cut Disney's film output from about 18 a year to about a dozen. Of those, about 10 will be released under the Walt Disney Pictures banner, a proven family friendly brand that includes the successful "Pirates of the Caribbean" franchise.

Disney's Touchstone label, which is responsible for more esoteric fare by artists like Joel and Ethan Coen of "Fargo" fame, will be cut back to only two or three releases a year. Recent Touchstone films have included the box-office flops "The Alamo" and "The Ladykillers."

The shift, the company explained, will allow Disney films to bolster the resources of other divisions. A hit like "Pirates of the Caribbean," for example, can spawn video games, action figures, cable TV shows and, in the case of "Pirates," give new life to an old Disney theme park attraction.

"When we do it well, the lift it gives to the entire company is so significant," Dick Cook, chairman of Walt Disney Studios, told The Associated Press.

Disney also is consolidating its domestic and international marketing, distribution and home video efforts, the company said Tuesday.

The shift to more Disney-branded films has been expected for some time, as have staff cutbacks resulting from a reduction in the total number of films.

Surprising, though was the loss of Jacobsen, who has been head of live-action production for more than a decade.

"Sometimes these things just happen," Cook said. "She is a fantastic executive, very talented, great taste, very smart. She is so capable, she did so many wonderful things at Disney that will be legacies that will last for years to come."

Disney veteran Oren Aviv, president of marketing and chief creative officer of The Walt Disney Studios, was promoted to president of production. He will oversee the live-action development and film production for the studios.

Disney CEO Robert Iger had indicated previously that the company planned to pay greater attention to its Walt Disney Pictures brand, although studio officials didn't elaborate until Tuesday.

"It becomes a much better investment for us when we make a Disney-branded film," Iger said last September. "We're not going to go out of the non-Disney-branded live-action business, but there has been a dramatic shift."

Successful Touchstone films, like "The Life Aquatic With Steve Zissou" don't come close to matching the profits of the blockbusters, Cook said, and don't provide the marketing tie-ins with theme parks, games and action figures.

David Miller, managing director of the brokerage firm Sanders Morris Harris Group., said earlier this month that Wall Street sees the move toward more Disney-branded films as necessary if the entertainment giant wants to realize double-digit growth.