For a few years, Hello Sunshine was the clearest proof that a star-founded production company could become a blue-chip asset: private equity paid a premium for Reese Witherspoon‘s taste in books and her knack for turning them into prestige television. The company’s latest move shows what that premium is worth now that the streaming spending boom is over. Weeks after Witherspoon bought the company back alongside the French studio group Mediawan, Hello Sunshine is cutting roughly half of its workforce.

As Deadline first reported, a source familiar with the cutbacks said they were not unexpected and are part of an effort to refocus Hello Sunshine on its core strategic areas. The employees who remain will concentrate on film, television and the Witherspoon-branded book club, along with the social and digital marketing and the brand partnerships that support them. A Hello Sunshine representative declined to comment on the staff cuts.

The cuts strip the company back to the slate that made its name. Launched with backing from Peter Chernin and Jesse Jacobs through The Chernin Group, Hello Sunshine assembled a run of premium credits that includes Big Little Lies, The Morning Show, Where the Crawdads Sing, Little Fires Everywhere, Daisy Jones & The Six, From Scratch and The Last Thing He Told Me.

That track record is what Candle Media paid for. The Blackstone-backed company, run by former Disney executives Kevin Mayer and Tom Staggs, valued Hello Sunshine at $900 million when it bought the company in 2021. The price of this month’s buyback was not disclosed, but knowledgeable sources told Deadline that Candle likely lost hundreds of millions of dollars on the deal.

The markdown reflects a wider correction. Private equity flowed into entertainment while interest rates were low and Netflix and its rivals seemed to have a bottomless appetite for programming. When the streamers curtailed their spending, many suppliers suffered, and a turbulent economy marked by rising rates and fuel costs did not help.

Mediawan, whose holdings also include Brad Pitt‘s Plan B, is the partner Witherspoon chose, and she described the deal in creative rather than financial terms. The group has “built a global, independent studio by putting creators first,” she said in a statement earlier this month. “That has always been my vision for Hello Sunshine.” Co-founder Seth Rodsky has joined the board alongside Witherspoon and representatives from Mediawan. Deadline puts the layoffs at about 30 people.

That vision now has to work at half the size: a company once priced at $900 million is being rebuilt around the same three things, films, series and a book club, that made it worth buying in the first place.

Tags: Reese Witherspoon, layoffs, Hello Sunshine, acquisitions, Candle Media, Mediawan