DreamWorks Animation revenue up, profit down on release of 'Shrek Forever After'
The Glendale animation studio reported revenue of $158.1 million, up 20% from the same quarter a year ago, when it didn't release a new movie. But with higher costs around the release of this May's "Shrek Forever After," net income fell 6% to $24 million.
"Shrek Forever After" has grossed $603 million in ticket sales worldwide and has yet to open in Japan. The film, which cost $165 million to produce and about $175 million for prints and advertising, is already profitable for DreamWorks, but is performing below 2004's "Shrek 2" and 2007's "Shrek the Third."
"It's very hard to look at this as, in any context, anything short of a blockbuster," DreamWorks Animation Chief Executive Jeffrey Katzenberg said on a conference call with analysts.
In June, DreamWorks Chief Financial Officer Lew Coleman said at an investors' conference that the company's earnings would be lower than last year in part due to the box office underperformance of "Shrek Forever After."
The movie contributed $51.8 million in revenue during the quarter, about 60% from box office and 40% from licensing, DreamWorks said.
By contrast, three years ago, "Shrek the Third" contributed $109.1 million during the same quarter for DreamWorks.
March's "How to Train Your Dragon," which has sold $480 million worth of tickets worldwide, brought in $38 million in revenue to the company.
DreamWorks has one more movie coming out this year, November's superhero comedy "Megamind," making this the first year during which the studio will have released three films.
On the call, analysts peppered DreamWorks executives with questions about the number of 3-D screens in theaters as the company has bet heavily on the technology and produces all its pictures in 3-D.
Katzenberg said the number is growing rapidly but acknowledged that when 3-D films open closely together, there still aren't enough screens to accommodate them all on the number studios desire for a nationwide release. Next May, for instance, DreamWorks' sequel to "Kung Fu Panda" opens one week after "Pirates of the Caribbean: On Stranger Tides" and two weeks after "Priest," both of which will also be in 3-D.
"If there are 10,000 screens and three movies, each will get about one-third," he said.
DreamWorks stock closed at $32.08 on Tuesday, up 1.3%, before the earnings were announced. After hitting a 2010 high of $44 in March, the company's stock fell precipitously in May as it became clear that "Shrek Forever After" would perform worse at the box office than previous "Shrek" movies. It has recently risen, however, from a low of $27.08 in June.
-- Ben Fritz
Photo: A scene from "Shrek Forever After." Credit: DreamWorks Animation.