Digital Prints All Over Lab Layoffs

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Digital Prints All Over Lab Layoffs
Technicolor’s film-processing lab in Glendale.

Technicolor SA – a name that evokes the vivid color in films made during Hollywood’s golden age – is laying off 50 employees from its Glendale film lab as the company finishes its transition from a film processor to a distributor of digital movie prints.

The company has let 46 employees go since November, with a handful to follow in coming months. With this latest round of cuts, about 500 Technicolor employees will have been laid off from the company’s film processing labs in Los Angeles within the past year, according to data from the state Employment Development Department.

A company spokeswoman said the recent cuts will complete the phasing out of its U.S. 35 millimeter film-processing business as the movie industry moves to digital filming and projection.

“The focus is on digital,” said Technicolor spokeswoman Season Skuro. “We’re in the process of transitioning out (of film).”

The processing work involves developing the film, which is much like developing old Kodak camera film, and making multiple copies that are sent to individual theaters. Today’s digital movies can be replicated easily, making them far less labor intensive.

The cuts to film-processing jobs come as theaters in the United States and abroad transition to digital projection. This month, digital projection passed 35 mm as the dominant medium of cinema exhibition in the United States. Meanwhile, newer screens built in emerging cinema markets such as China are largely digital.

The decline has happened fast. About 13 billion feet of film were used in worldwide cinema exhibition in 2008, but only about 4 billion feet are expected to be used this year, said David Hancock, a London-based analyst at market research firm IHS Inc.

The digital conversions are only expected to accelerate this year. U.S. exhibitors want to take advantage of an agreement that will expire at the end of the year that requires movie studios to help finance theaters that transition to digital projection.

Working together

Meanwhile, the 35 mm film in circulation is processed almost entirely by Technicolor’s Hollywood rival, Deluxe Entertainment Services Group Inc., since Technicolor subcontracted its few remaining North American 35 mm film-processing jobs to the company last year.

Still, as Technicolor has conceded its iconic film-processing business, the company has reinforced its role in distribution. In the Deluxe deal, Technicolor acquired that company’s 35 mm distribution contracts, which involve sending reels of film to theaters.

In fact, Technicolor has become the leader in electronic distribution through the acquisition of satellite receivers, which beam digital files to theaters.

In the third quarter of last year, the company reported that revenue from digital cinema distribution nearly doubled, though it did not break out a precise figure. At the same time, Technicolor said its film-processing business was down 42 percent for the quarter.

“It’s clear that Technicolor is withdrawing from processing film and has gone to digital distribution,” said Hancock.

Technicolor got started in 1914 in Boston when a group of movie pioneers created a process to show black-and-white films in color by using a projector with one green lens and one red. The company became known for its role in creating early color movies such as “The Wizard of Oz,” “Fantasia” and “Gone With the Wind.” Over the years, the company’s name became synonymous with the vivid and high-quality color of many American movies.

Technicolor was acquired in 2000 by French media and technology conglomerate Thomson, which took the name Technicolor SA. It has not been a standalone company since 1982, when it was acquired by New York holding company MacAndrews & Forbes.

A statement issued by the company said the reduction in L.A. personnel “has been related to the general decline in 35 mm film volumes. Technicolor is scaling the business appropriately.”

Big picture

Technicolor and Deluxe were locked in a battle for 35 mm film-processing work for much of the last century before last year’s unprecedented agreement to effectively work together.

Technicolor’s hold on the market had weakened in 2010 when the company lost a crucial deal to process 35 mm film for Universal Studios. Deluxe picked up the contract and Technicolor shuttered its nearby Studio City facility, letting go 394 employees last January.

Shortly after, Technicolor contracted Deluxe to handle all of its remaining 35 mm film-processing work in North America and the company shuttered a North Hollywood facility, laying off 100 additional employees.

About 100 of the lab workers that had been laid off over the year were rehired to work in a new 40,000-square-foot film-processing facility Technicolor opened last year down the street from DreamWorks Animation SKG in Glendale.

That facility specializes in processing large-format, 65 mm to 70 mm film to be used on larger screens such as those operated by Ontario, Canada-based Imax Corp.

Demand for large-format film remains high among producers, but even those formats are expected to go digital in the future.

“The future of the Glendale film operation will hinge primarily on how fast the large-screen format (70 mm) transitions from a photochemical process to digital processing,” the statement said.

The company still has about 1,680 employees in eight offices throughout Glendale, Burbank and its North American headquarters in Hollywood. Technicolor’s Skuro said most of the local employees work in digital film services, which includes postproduction work.

The French parent has about 17,000 employees worldwide, though that number is likely to fall. Last month, the company’s directors sent a note to investors stating that 600 jobs were to be cut due to the European economy. In addition to film distribution, the company sells satellite and cable TV set-top boxes, and is one of the world’s largest DVD and Blu-ray disc makers.

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