New consolidated accounts filed by Brown Bag Films UC show that the group recorded the pre-tax losses for 2023 after a number of years of strong profits on the back of the streaming content boom.
The group recorded the loss after revenues decreased by 31pc, or €10.1m, from €32.74m to €22.62m in the 12 months to the end of last August.
The pre-tax loss of €1.14m followed a pre-tax profit of €6.92m in 2022.
‘All the streamers – Apple, Netflix, Prime – are cutting costs and content’
In their report, the directors state that the €2.06m exceptional cost from the redundancy programme “reflects changes in the industry which left the group with the unfortunate course of action to reduce its headcount”.
Numbers employed at the group last year reduced by 72 from 302 to 230 and the reduction meant staff costs fell 12pc from €22.08m to €19.38m.
The group – which operates studios in Dublin, Toronto and Bali – declared a dividend of €1.9m last year.
The directors are satisfied with the performance of the business given the level of investment during the year
The business – celebrating its 30th year – was founded in Dublin in 1994 by Cathal Gaffney and Darragh O’Connell.
Brown Bag Films was acquired by Canadian-based 9 Story Media Group in 2015. In March of this year, 9 Story Media was purchased by the US-based Scholastic for $185m.
In an interview on RTÉ radio in March, Cathal Gaffney spoke about the recent downturn in the industry
“The market has softened quite a bit. For the last 10 years, all the streamers – Apple, Netflix, Prime – were commissioning tonnes and tonnes of children’s animation. Now they are cutting costs and content that they produce.
“It’s a tricky time globally, but it will bounce back, it always does.
“We are somewhat insulated in that the work we do is in both service and IP [intellectual property] work. But it is not as busy as it was.”
Some of the the studio’s global hit TV shows include Doc McStuffins, Henry Hugglemonster, Bing, The Magic School Bus: Rides Again and Octonauts.
In the year under review, Brown Bag’s Eva The Owlet debuted on Apple TV.
‘It’s a tricky time globally, but it will bounce back, it always does’
Before taking the group’s €2.06m redundancy programme cost and interest payments of €351,700 into account, Brown Bag Films UC’s operating profits declined by 85pc from €7.24m to €1.27m.
The pre-tax losses also take account of non-cash depreciation of €930,877 and non-cash amortisation costs of investment in film and TV of €295,565.
Directors’ pay increased from €798,812 to €842,107. The firm recorded a post-tax loss of €677,163 after recording a corporation tax gain of €466,497. Shareholders’ funds totalled €26.88m.
