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Paramount to lay off 53 people; save $10 million

- Associated Press - Friday, October 1, 2010

LOS ANGELES (AP) - Viacom Inc.'s movie studio, Paramount Pictures, is laying off 53 people worldwide, most of whom are based in Los Angeles, in a move that will save about $10 million a year.

Chief Operating Officer Frederick Huntsberry and Vice Chairman Rob Moore informed staff of the move in an e-mail Thursday.

The layoffs come amid an industrywide decline in DVD sales and as Paramount has pared back the number of movies it releases every year.

In the quarter that ended in June, Paramount's revenue fell 10 percent to $1.25 billion, but it posted $69 million in operating profit, reversing a small loss, as it cut costs by releasing fewer movies.

The layoffs came by eliminating redundant positions and merging certain divisions, including folding the direct-to-home-video team under Paramount Digital Entertainment, which produces made-for-Internet videos.

The home video team, operating the Paramount Famous brand, had released movies that bypassed theatrical release such as "Road Trip: Beer Pong." It was set to release "Mean Girls 2" to home video next year.

Now that team will work under the president of Paramount's digital arm, Tom Lesinski. In 2007, the digital unit experimented with the release of "Jackass 2.5" by allowing people to watch it for free online at a site owned by Blockbuster Inc., before sales and rentals of physical DVDs were made available.

That model was repeated last year with the made-for-Web horror movie "Circle of Ei8ht."

"The restructuring we are announcing today consolidates our operations in a way that is consistent with how more of our customers are exploring multiple facets of the film experience," Huntsberry and Moore said in their memo. "Paramount as a company simply must keep evolving and refining its operations."

Paramount's licensing and consumer products division is also being merged into its motion pictures promotions division, overseen by executive vice president LeeAnne Stables.

Viacom's widely traded Class B shares rose 9 cents to $36.28 in after-hours trading, reversing a 9-cent decline to $36.19 in the regular session on Thursday.

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