Then is it the production process that is so costly that making films on a much smaller scale, for a much smaller market, can't be profitable? Or is the organizational side of downsizing a company with these amounts the real issue?
No doubt there are HUGE costs in downsizing an industrial giant. It's likely the cost of the legacy overheads are the real cost issues. Production of film at the correct scale probably wouldn't be a cost problem. The issue is getting from where you are today to the correct scale when you have the legacy costs consuming all the money.

who finds pride in downsizing a company and make it profitable at a size only a few percent of what it once was?
If it is done right, bringing a company back to profitability might be a very rewarding challenge. The upside is that once a company is profitable you may get to try again, if you can develop new products and services that someone wants whether they are in your current market or something else.