Disney Readies for Layoffs in Wake of Home Entertainment Declines

Adam Jeffery | CNBC

Disney will be laying off about 150 people at its film studio by the end of the week, according to sources close to the situation. Insiders say that the number of pink slips in the works is less than 5 percent of the studio. The layoffs will be particularly focused on home entertainment as the company adjusts to industry-wide declines in DVD sales. Though kids' movies, like many of Disney's have been more resilient, the company is still affected by declining sales. Instead, the studio is focusing more on digital distribution, which requires fewer people.

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Other areas at the studio will see cuts as well, including the technology division, described by one insider as "bloated," and distribution. The studio is releasing just 10 films this year, five fewer than in 2009, which means a smaller staff is needed, both for managing the distribution, as well as marketing.

As Disney completes an internal review looking for areas where it could make cost cuts to adjust to shifting business models, we could see other cuts as well. For example, the consumer products business could see changes to adapt to different licensing models. Last week Lucasfilm shut down its traditional video game production and laid off about 150 people. And last year Disney Interactive laid off about 50 employees as it shut down a Texas game studio.

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Disney is not making these layoffs because it's going through a rough spot-- in fact it's quite the opposite. The stock is trading at an all-time high and in its last fiscal year the company reported record results. CEO Bob Iger is looking for inefficiencies as he looks to maintain the company's growth.

—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin