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LOS ANGELES, Jan 20 (Reuters) - Warner Bros. Entertainment plans to cut 800 jobs, or 10 percent of its worldwide staff, as Hollywood outsources and downsizes under the weight of the current recession.
Studio chiefs of Time Warner Inc's TWX.N Warner Bros, the producer of the smash hit "The Dark Knight," sent an email to employees worldwide saying they will have to cut jobs in coming weeks due to the current economic downturn.
Time Warner’s stock fell 49 cents or 5.1 percent to $9.12 a share in afternoon trade.
“We are very sad to announce that based on the global economic situation and current business forecasts, the studio will have to make staff reductions in the coming weeks in order to control costs,” wrote Barry Meyer, chairman and chief executive, and Alan Horn, president of the studio.
Sony Pictures’ parent company has already announced 8,000 job cuts, chiefly from its electronics division, but Hollywood insiders say they believe the studio will follow suit.
"Not surprisingly, costs are a focus," said Chris Marangi, an analyst at Gamco Investors, which holds Time Warner and Time Warner Cable Inc TWC.N shares, referring to Hollywood overall.
“There are both cyclical and secular issues with film production. For many years, there has probably been too many movies being produced and a cyclical downturn has forced some rationalization. You’re seeing this across the board,” he said.
In the email Horn and Meyer said that despite the company’s solid performance in 2008, the decision reflected changes necessary for stability and growth going forward.
“The changing entertainment business landscape, shifting consumer demand and the overall state of the economy have affected companies around the world, and Warner Bros. is not immune to these factors,” they said.
The executives said that as part of the cost cuts, they would outsource certain U.S.-based functions, such as management information systems and accounts payable.
A spokesman said 200 open positions worldwide would be eliminated, 300 jobs would be outsourced. Of the 300 jobs to be outsourced, 100 people would be offered jobs at the company to which their positions would be outsourced.
Another 300 staff will be laid off. (Editing by Edwin Chan, Leslie Gevirtz)
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