Animation studio Brown Bag Films posts pre-tax loss following redundancy payments

The company cut more than 70 jobs last year

Eva the Owlet was made by Brown Bag Films for Apple+.

Animation studio Brown Bag Films posted pre-tax losses of €1.14m last year following spending of just over €2m on redundancy payments.

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 backing of the streaming content boom.

The pre-tax loss followed a pre-tax profit of €6.92m in 2022. The group recorded the loss after revenues decreased by 31% from almost €33m to €22.6m in the 12 months to the end of August, 2023.

In the company report, the directors said that the €2m 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 from 302 to 230 and the reduction in employees resulted in staff costs decreasing by 12% from €22m to €19.4m in the period.

The accounts show that the group — which operates studios in Dublin, Toronto and Bali — declared a dividend of €1.9m last year.

The directors said that they are satisfied with the performance of the business given the level of investment during the year. The company — celebrating its 30th year in business this year — was founded in Dublin in 1994 by Cathal Gaffney and Darragh O’Connell.

Brown Bag Films was acquired by Canada-based 9 Story Media Group in 2015 and pledged to take on 50 staff following the completion of the deal.

In an interview on RTÉ Radio One's The Business in March, Mr Gaffney spoke about the recent downturn in the industry. He said: “The market has softened quite a bit. For the last 10 years all the streamers, Apple, Netflix, Prime were all commissioning tonnes and tonnes of children’s animation.

“Now that has pulled quite a bit…they are cutting both costs and content that they produce. It is a tricky time globally, but it will bounce back, it always does.

“We are somewhat insulated in that the work that we do is in both service and IP (Intellectual Property) work. It is not as busy as it was," Mr Gaffney continued.

Some of the the studio’s global hit TV shows include Doc McStuffins, Daniel Tiger’s Neighborhood, Henry Hugglemonster, Bing, Peg + Cat, Peter Rabbit, Wild Kratts, Olivia, Noddy in Toyland, The Magic School Bus: Rides Again, and Octonauts.