Comcast Corporation CMCSA-owned NBCUniversal’s DreamWorks Animation has announced the layoff of 200 employees. Notably, NBCUniversal has recently taken over DreamWorks Animation for $3.8 billion. Meanwhile, the retrenchment is regarded essential for the smoother integration of DreamWorks Animation. Majority of the layoff is expected to take place at the corporate and service distribution levels.
DreamWorks Animation’s Integration
Comcast has been trying to boost its Universal Pictures division in a bid to build a family entertainment brand which will pose competition to The Walt Disney Company DIS, Time Warner Inc. TWX and Viacom Inc. VIAB. The company has been eyeing the takeover of DreamWorks Animations as part of its strategy to increase the competitiveness of Universal Pictures. Notably, DreamWorks’ AwesomenessTV has an agreement with Alphabet Inc. under which it can release several films on the video-sharing site, YouTube, over the next two years. DreamWorks has also strengthened its multi-year global licensing deal with Netflix Inc., which covers the production of a number of new original series.
The Bottom Line
Comcast has been facing a number of challenges of late, starting from cord cutting in its pay TV business to competition from media giants. However, its strategy to boost operations at Universal Pictures and generate revenues from film entertainment business bodes well. Moreover, prior to its takeover, DreamWorks Animation has been spending heavily on employees which may have been a drag on its resources. Thus, the layoff is the first of the necessary steps taken by the company to bring down expenses and streamline operations.
Comcast currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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