Lionsgate lays off 25 at movie studio and ends Codeblack Films initiative

“Hunger Games” studio Lionsgate has laid off 25 workers as part of a realignment of its film division and is ending its Codeblack Films initiative, a label that makes movies targeted at African American audiences, a person familiar with the situation said Friday.

The cuts at the Santa Monica-based entertainment company affected employees working in production, post-production, marketing and distribution, according to the person, who was not authorized to comment publicly on the matter. Eight people were laid off in the firm’s New York office, as the studio moved to consolidate its marketing and distribution operations in Santa Monica.

The staff reductions come as Lionsgate is facing a challenging competitive marketplace. It became a mini-major film studio with movie franchises including “Hunger Games” and “Twilight,” and expanded its business by buying pay cable network Starz in 2016.

But the publicly traded company must now contend with a treacherous landscape where larger rivals are getting even bigger, with Walt Disney Co. buying 21st Century Fox assets and Warner Bros. and HBO becoming a part of AT&T. Additionally, Netflix is becoming a bigger player in the film and TV business by making the kinds of movies that are usually Lionsgate’s bread and butter.

Analysts expect the consolidation of power in the industry will eventually force Lionsgate to sell. The cuts surfacing Friday represent a small portion of Lionsgate’s overall head count of 1,600, but will probably fuel sale speculation in Hollywood.

The company has recently struggled to produce major hits, releasing flops such as last year’s “Robin Hood,” which cost $100 million to produce and grossed $80 million worldwide. Last year, its share of the domestic box-office market shrank to 3%, according to Box Office Mojo. Its 2019 films include Tyler Perry’s “A Madea Family Funeral,” a “Hellboy” reboot and “John Wick: Chapter 3.”

Joe Drake, who took over as head of Lionsgate’s motion picture group a little more than a year ago, said in a memo to staff that the “evolving landscape” of entertainment required the company to streamline its operations.

“We are constantly looking at ways to better align our company with our industry’s evolving landscape and therefore the needs of the audience and our customers,” Drake wrote. “We couldn’t be more thrilled about what 2019 has in store for us as a company, our exciting upcoming film slate, the new leadership team, as well as the agility that has always been a cornerstone of the company, allowing us to implement new ideas quickly and efficiently.”

Codeblack Films was born in 2012 from a deal between Lionsgate and Jeff Clanagan’s Codeblack Enterprises. The unit’s first theatrical release was the Kevin Hart stand-up comedy concert film “Let Me Explain,” which grossed a highly profitable $32 million. Its other projects included the Tupac biopic “All Eyez on Me” from 2017.

Clanagan did not immediately respond to a request for comment.

Codeblack Films will continue to exist independently under Clanagan, according to the person familiar with the situation.

“Though the terms of our current partnership are ending, we expect to continue to have a great relationship with Jeff and his team,” a Lionsgate spokesman said.

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