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Disney Is Restructuring Money-Losing Interactive Unit

Jan. 25 (Bloomberg) -- Walt Disney Co.’s money-losing interactive media unit cut 29 percent of its workers in video-game development for consoles, according to a person with knowledge of the decision.

Disney fired about 200 of the 700 workers who design games for consoles such as Nintendo Co.’s Wii, said the person, who sought anonymity because the move isn’t public. Disney Interactive Media has about 3,000 workers, the person said.

John Pleasants and James Pitaro, installed as the unit’s co-presidents last year by Disney Chief Executive Officer Robert Iger, are cutting console jobs as they add online and mobile games. Iger, 59, told investors in November the company shouldn’t be in the interactive business “if we’re not going to be able to make money.”

Disney’s interactive unit lost $234 million in the most recent fiscal year. In a 2006 interview, Iger said it would take as long as five years before the division would be profitable.

In a statement, Disney said the restructuring began this week at the interactive division, which includes games, online worlds and websites aimed at parents and kids. The Burbank, California-based company said it’s “setting a strategic direction for future success in the digital-media space.”

Jonathan Friedland, a spokesman for Disney, declined to comment on the number of jobs cut.

Austin, Vancouver

Dana Henry, a Disney spokeswoman, said in an e-mail today that Propaganda Games in Vancouver were shuttered last week and Junction Point Studios in Austin, Texas, had “a minor reduction in workforce, as part of an overall restructuring of the Disney Interactive Media Group.”

Disney, the world’s biggest media company, fell 8 cents to $39.86 today in New York Stock Exchange composite trading. The shares climbed 16 percent in 2010, exceeding the 13 percent increase in the Standard & Poor’s 500 Index.

The job cuts were reported previously by the Los Angeles Times and others.

Pleasants, who oversaw Playdom Inc. before its acquisition by Disney, and Pitaro, who ran entertainment assets at Yahoo Inc., replaced Steve Wadsworth, who left Disney last year. Both executives report to Iger.

To contact the reporter on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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