DreamWorks Animation posts 26% jump in revenues in first quarter

DreamWorks Animation, the Glendale studio behind the "Shrek" and "Kung Fu Panda" movies, saw its revenues jump 26% to $136.1 million in the first quarter.

The company said it earned a profit of $9.1 million, or 11 cents a share, the first quarter of the year, a 3% increase over last year, reflecting international ticket sales from the Shrek spinoff, "Puss in Boots." The movie grossed $554 million worldwide since its release last October.

The results exceeded the consensus estimate among analysts, who had forecast a profit of 9 cents per share and revenues of $134 million.

Investors will be closely watching the performance of DreamWorks' next release, "Madagascar 3: Europe's Most Wanted," which will debut June 8. The film will compete with Disney's animated feature "Brave," which will also hit theaters in June.

Another question mark for investors is whether DreamWorks will seek to release its own movies once its current distribution deal with Paramount Pictures expires later this year. DreamWorks has signaled that it may chose to distribute its own movies. Last year, the studio tapped respected distribution veteran Chuck Viane to advise the company on its options.

“It would be premature to presume that self-distribution is not a serious and viable option for us,’’ DreamWorks Animation Chief Executive Jeffrey Katzenberg told analysts, adding that he expected to reach a decision by Labor Day.

Katzenberg said he was “very excited” about opportunities to expand business in China, where the company recently announced plans to build a studio in Shanghai with two state-owned Chinese media companies.

He declined to comment on letters DreamWorks and several other studios received from federal regulators investigating allegations of inappropriate dealings with Chinese officials.

DreamWorks' quarterly results were released after the markets closed on Wednesday.  Amid concerns of slowing DVD sales, DreamWorks' shares have fallen about one third in the last year, closing Wednesday at $18.46, down 2%.

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Photo: A scene from upcoming DreamWorks Animation film "Madagascar 3: Europe's Most Wanted," to be released by Paramount Pictures in June. Credit: Paramount Pictures/DreamWorks Animation

Disney, DMG team up to make 'Iron Man 3' a Chinese co-production

The Walt Disney Co. and its Marvel Studios subsidiary said Monday that "Iron Man 3" will be a co-production with China, as the Burbank company teamed with DMG Entertainment of Beijing to co-finance and distribute the film.

Robert Downey, Jr., Gwynneth Paltrow and Don Cheadle will return for the third movie in the hit franchise, whose two films grossed more than $1 billion worldwide and $42.8 million between them in China. The third installment of the movie will be directed by Shane Black unlike the first two installments which were directed by Jon Favreau. Filming in the U.S. is to start in May, and in China in late summer; the movie is slated for release in May 2013.

Foreign films co-produced in China have an easier time getting cleared by Chinese censors and do not fall under the country's annual import cap. 

“The popularity of the Marvel franchise globally creates a huge opportunity to deliver fans yet another action packed film,” Stanley Cheung, Disney’s greater China managing director, said in a statement.

DMG and Disney did not reveal how much DMG would invest in the production, nor did they give specifics about what plot elements would be shot in China. Last week, DMG's chief executive Dan Mintz told the Los Angeles Times that the film's budget was $200 million.  A Disney spokeswoman said she had not heard what the budget was to be.

DMG is a 19-year-old private Beijing advertising firm-turned-film producer and aspiring distributor. It is a partnership between two Chinese and Mintz, an American. 

DMG will manage the Chinese production elements of “Iron Man 3’’ and keep the China distribution rights.

“Our collaboration with Disney and Marvel marks a milestone in the global entertainment landscape, as this signifies the first multi-billion dollar franchise to be produced between Hollywood and China,” Mintz said in the statement.

DMG boasts close working ties with the state-run China Film Group, the country’s biggest studio and monopoly importer. DMG helped CFG with the production and marketing of two recent major propaganda films, one made to mark the 60th anniversary of the People’s Republic in 2009 and the other the 90th anniversary of the Chinese Communist Party. Both films were hits but were still out-earned by Hollywood imports.

Last spring at a black-tie party, Mintz emceed the announcement of DMG’s partnership with Endgame Entertainment to make Rian Johnson's film “Looper.” DMG added little-known Chinese actress Xu Qing to the time-travel action film starring Joseph Gordon-Levitt, Bruce Willis and Emily Blunt, which will arrive in U.S. theaters this fall.

In an interview with The Times last week, Mintz said DMG was going to “talk to the whole world but try to infuse Chinese elements.”

The announcement on "Iron Man 3" comes just days after Disney said it would join an initiative with an animation arm of China's Ministry of Culture and China's largest Internet company, Tencent Holdings Ltd., to develop China's animation industry. Disney said it would offer its expertise in areas such as story writing and market research to help develop local Chinese talent.

In the first quarter, China overtook Japan as the world’s second biggest box office market after the U.S. Last year, China's box office posted its 10th consecutive year of double-digit growth to gross $2.08 billion, up 31% from 2010.

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Photo: Gwyneth Paltrow as Pepper Potts and Robert Downey Jr. as billionaire industrialist Tony Stark in the movie "Iron Man 2." Credit: Francois Duhamel / Marvel Entertainment 

New animated series to debut on online channel Shut Up! Cartoons

One is about a Japanese monster that shrinks down to human size and is forced to seek a variety of mundane jobs. Another describes the life of a 13-year-old going through puberty, from the perspective of a recent Cal Arts graduate.

"Krogzilla gets a job" and "Pubertina" are among 18 original series that will be featured on a new online animation channel on YouTube debuting April 30 called Shut Up! Cartoons. It's the brainchild of comedic duo Anthony Padilla and Ian Hecox, creators of the popular YouTube channel Smosh.

Shut Up! Cartoons, targeted at teens and young adults, will feature a diverse lineup of shows, and is the latest example of how the Internet is emerging as an increasingly important breeding ground for animation.

Top online video distributors such as Yahoo and YouTube are creating or distributing premium online animation as part of an effort to keep viewers on their sites and to generate more advertising dollars. Google Inc.'s YouTube, its dominant online video site, is helping fund and develop 100-plus free high-quality channels with the support of top Hollywood animation veterans and new talent.

"It's a really exciting opportunity for us,'' said Barry Blumberg, the Shut Up! Cartoons executive producer and former longtime chief of Disney Television Animation. "What everybody struggles with in the media world is that there are a lot of cooks in the kitchen. We talked to creatives and said, 'What would it be like to essentially make your own thing?'"

Read more in today's business section.

 

 

 

 

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Photo: Scenes from "Pubertina," one of several animated series to be featured on a new animation channel on YouTube called Shut Up! Cartoons. Credit: Shut Up! Cartoons

DreamWorks Animation's fourth-quarter earnings drop sharply

DreamWorks Animation saw a sharp decline in profit in the fourth quarter of 2011 compared with a year earlier, reflecting weak holiday DVD sales.

The Glendale studio reported that it earned net income of $24.3 million, or 29 cents a share, in the quarter, versus a profit of $85.2 million, or 99 cents a share, in the fourth quarter of 2010.

Revenue during the quarter totaled $219 million, down 21% from the same period in 2010, DreamWorks reported after markets closed Tuesday.

For the year, the company logged net income of $86.8 million on revenue of $706 million, compared with net income of $170.6 million on revenue of $784.8 million in 2010.

Part of the reason for the decline was that DreamWorks released two movies last year, "Kung Fu Panda 2" and "Puss in Boots," compared with three films in 2010.

DreamWorks recently announced plans to build a studio in Shanghai, which it billed as a landmark agreement with two state-owned Chinese media operations.

Oriental DreamWorks, a joint venture with China Media Capital and Shanghai Media Group in concert with Shanghai Alliance Investment -- an investment arm of the Shanghai municipal government -- is to establish a family entertainment company in China.

With an initial investment of $330 million, the Shanghai studio would develop original Chinese animated and live-action movies, television shows and other entertainment catering to the Chinese market.

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Image: A scene from "Kung Fu Panda 2." Credit: DreamWorks Animation

Paramount animation chief David Stainton resigns

Four months after he was hired, David Stainton has abruptly resigned as head of Paramount Pictures' fledgling animation unit, the studio announced Wednesday.

The Viacom Inc.-owned studio said Stainton had left his job for "personal reasons," and declined to elaborate on the reasons for his departure.

“We are grateful for the time David spent at the studio and we wish him well in his future endeavors,” Adam Goodman, president of Paramount Motion Picture Group, said in a statement.  

Goodman will directly oversee the animation development team moving forward, the studio said.

Paramount has been distributing movies from DreamWorks Animation for several years, but that relationship is expected to end when the studios' seven-year deal expires at the end of this year. The two sides have differed over how much DreamWorks should pay Paramount to distribute its movies.

Separately, DreamWorks last fall tapped former Disney distribution executive Chuck Viane as a consultant to advise it on its various options, including distributing its own movies.

Beginning in 2014, Paramount aims to release one animated feature a year with budgets up to $100 million, developing projects including those from Viacom's children's cable TV network Nickelodeon. The studio has released several movies based on Nickelodeon shows such as "SpongeBob SquarePants."

Before joining Paramount last October, Stainton spent 17 years at Walt Disney studios, where he rose to president of feature animation and remained in that top role until early 2006 when Disney acquired Pixar Animation Studios. At that time, Pixar's co-founder, Ed Catmull, and his creative partner, John Lasseter, were put in charge of the Burbank studio's storied but struggling feature animation division.

Stainton took over Paramount's animation unit after it launched last year following the release of "Rango," the critically acclaimed but moderately successful animated movie voiced by Johnny Depp that is nominated for an Oscar for best animated film.

Paramount also helped finance and distribute "The Adventures of Tintin," a 3-D animated film from director Steven Spielberg and producer Peter Jackson, which has grossed $372 million worldwide.

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Photo: David Stainton at Walt Disney Studios, where he served as president of feature animation. Credit:  Los Angeles Times

On Location: 'Cars 2' production designer Harley Jessup hits the road

In “Cars 2,” the latest feature film from Pixar Animation Studios and Walt Disney Studios, director John Lasseter and his team faced the challenge of how to take the familiar characters of Radiator Springs to a global stage for the first World Grand Prix. For that task, they turned to production designer Harley Jessup and his team of artists, who had to virtually create several iconic cities — including authentic settings and characters that would resonate with international audiences. Jessup took time to talk about how they did it.

Just like the characters in “Cars 2,” you went on a global tour as part of the production of the film, visiting London, Paris, Tokyo and the Italian Riviera. How important were these trips?

We were in Europe for 14 days in May 2009 [they visited Tokyo in October]. These trips were super helpful in bringing back the authentic details of the places that you just can’t get in books. You have to visit London, Tokyo, Paris and the Italian Riviera to know what each of these cultures is like and what the visual feeling of these places is. Before our trip, we had outlined our race routes through each of the cities. We tried to re-create the race routes, driving through the cities and stopping at key landmarks we wanted to include in the film.

What kinds of details were you looking for?

I used the photographs I brought back as resources for details about everything from sign graphics to mailboxes, models of cars, even what the sky looks like and how light reflects on buildings. Our goal was to try to get audiences in each of these cities to feel like we captured the essence of their cities. I took more than 10,000 photographs from the Europe trip and another 3,000 from Tokyo.

What look were you trying to create in designing these characters and virtual cities?

We wanted to weave these car-themed shapes into the traditional architecture of buildings. So, in London, there were these Georgian buildings where, if you look closely, you will notice they are built with a variety of car parts, such as shock absorbers for pillars. The dome of St. Paul’s Cathedral is shaped like a car’s differential casing. If we were building a skyline that looked too much like the actual city, John [Lasseter] would ask, “Well, what’s ‘Cars’ about that?”

And Big Ben was transformed into Big Bentley.

Big Bentley plays a pivotal part in the story. Denise Ream [the producer] arranged for us to get inside the clock tower, which is very hard to do. In order to make it fit into the “Cars” world, we scaled it up about 250%. We used a Bentley grille and hood ornament to surround the clock face, spark plugs in place of the Gothic spires, and created a wheel spoke design for the clock dial.

Where did you visit in Paris?

It was really fun for me to get to work in Paris again. We studied it so much for “Ratatouille,” so it was a treat to be back there. We went on this motorcycle tour through the city. We stopped at the Louvre, the Place de la Concorde and Notre Dame cathedral. We also visited an old marketplace near the Bastille that was torn down in the 1970s. In the movie, we transformed it into a black market for auto parts.

What was the inspiration for the fictional city of Porto Corsa in Italy?

We wanted it to be a mixture of an Italian Riviera town like Portofino, with its terra cotta roofs and brightly painted buildings, and Monte Carlo, which has a great Grand Prix tradition of racing. We visited the race every day and saw the drivers practice and took tours of the pit areas. It’s a very different world than American NASCAR racing. It’s a very cool and glamorous world, and we really wanted to show that.

You also took a test drive?

We toured a Fiat factory in Torino and we met with [famous car designer] Giorgetto Giugiaro and his son. They took us out on a Fiat test track where they had six cars parked. I didn’t have any experience with race cars, so it was really important for me to get the feel of being in a race car. Traveling at 150 miles an hour in an Alfa Romeo — it was really fun.

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Photo: Harley Jessup, production designer for "Cars 2" at Pixar Animation Studios in Emeryville, Calif. Credit: by Deborah Coleman / Pixar.

 

Universal acquires French animation studio for Illumination unit

Santa Monica-based Illumination Entertainment is looking more and more like a traditional animation studio.

The company's owner, Universal Pictures, has acquired French animation house Mac Guff Ligne, which made Illumination's 2009 hit "Despicable Me" and is working on its next two pictures: March's "The Lorax" and 2013's "Despicable Me 2."

Illumination is the family entertainment unit of Universal founded and run by former Fox Animation president Chris Meledandri. Along with "Despicable Me," Universal released Illumination's so-so performer "Hop," a live-action animation hybrid, in April.

In the past, Meledandri has said that Illumination would outsource all of its animation work rather than employ artists as competitors like Disney, Pixar and DreamWorks do. Apparently that approach has changed somewhat based on the significant amount of work that Mac Guff Ligne is doing for Illumination.

Unlike those other animation studios, Mac Guff employs fewer than 50 people on a permanent basis. It expands to as many as 350 people, however, at the peak of production on movies.

Universal is looking to Illumination to eventually provide it with two movies per year.

Mac Guff, which is based in Paris and will now be called Illumination Mac Guff, will continue to be led by its president, Jacques Bled. He will now report to Meledandri.

— Ben Fritz

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Photo: A scene from "Despicable Me." Credit: Universal Pictures.

Virtual studio in Venice dives into the ocean

Ever wanted to go scuba diving without actually taking a dip in the ocean?

Now you can do it virtually, thanks to an unusual oceanic environment created by a start-up called Wemo Media.

The Venice-based company has spent the last two years developing the Web application, named theBlu, which simulates an oceanic environment and combines elements of an animated movie, online game and social media.

Unlike a traditional studio, Wemo functions as a virtual studio in which the animators and computer programmers aren’t housed in a traditional bricks-and-mortar building. The fish and fauna are created by artists from Los Angeles to Mumbai and are programmed to behave as they would in their natural habitat — allowing viewers to tag, follow and even buy their favorite fish.

TheBlu has been in a test phase for several months but officially debuts this week, the first of several interactive entertainment projects Wemo hopes will harness the global reach and interactivity of the Web.

Read more about theBlu in Saturday's business section.

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Photo: Video on the making of theBlu. Credit: Wemo Media

DreamWorks Animation plans to open studio in China

DreamWorks Animation SKG aims to build an animation studio in Shanghai in a further effort to plumb the vast Chinese economy.

The Glendale-based studio, which recently announced a deal with online video site Youku.com to distribute its "Kung Fu Panda" movies in China, is recruiting executives to run a studio that would produce animated movies and TV shows catering to the Chinese market, said a person familiar with the plans who was not authorized to speak about them.

DreamWorks has tapped RSR Recruiting of Los Angeles to recruit staff to run the facility.

A spokeswoman for DreamWorks Animation declined to discuss the proposed studio. "As it is an important market for us and one in which the DreamWorks Animation brand and products have tremendous value, we continue to explore opportunities in China,'' the spokeswoman said. "Any further speculation is premature."

The plans were first reported by AFP and Variety.

China represents big opportunities for studios like DreamWorks, which has enjoyed strong box-office success with its "Kung Fu Panda" movies in China. The country, however, also poses plenty of challenges, including restrictions on the number of foreign films it allows into the country and rampant piracy.

Nonetheless, DreamWorks is one among several studios and Hollywood companies seeking to tap the Chinese market. Beverly Hills-based RealD recently announced that would partner with Beijing SAGA Luxury Cinema Management Co. to equip the Chinese theater chain with 3-D technology. Last month, production companies Relativity and Legendary East also unveiled new ventures in China to co-finance and release movies.

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Photo: The martial arts action hero Po, voiced by Jack Black, in "Kung Fu Panda 2." Credit: DreamWorks Animation

India's Tata Elxsi buys majority stake in Los Angeles animation company

Further signaling India's growing presence in Hollywood, the visual effects and engineering division of Indian conglomerate Tata is buying a majority share in a Los Angeles-based kids' animation firm.

Tata Elxsi, which a year ago opened a visual effects studio in Santa Monica, has reached an agreement to acquire a 51% stake in A Squared Entertainment, producer of the animated TV and Web series "Secret Millionaire's Club" with billionaire Warren Buffett and "Martha & Friends," the upcoming Web series on AOL and Hallmark Channel specials featuring a 10-year-old Martha Stewart.

The two companies agreed to form a joint venture to produce and distribute children's series for television, the Web, mobile devices and video games.  Under the deal, Tata has agreed to finance the productions and supply the animation workforce from its studio in Bangalore, India, while A Squared Entertainment will provide the creative direction for the projects, using its contacts in Hollywood. Financial terms were not disclosed.

"We're really trying to create an animation studio of the 21st Century,''' said children's entertainment veteran Andy Heyward, co-president of A Squared Entertainment. "The advantage for us is to have the very best of the Hollywood entertainment community and be able to produce the animation in a very low-cost, skilled environment with a partner who has the wherewithal to do that."

Heyward founded A Squared Entertainment with his wife, Amy Moynihan Heyward, in 2009. For more than 25 years Andy Heyward ran the Burbank-based DIC Entertainment Corp., a onetime unit of Capital Cities/ABC Inc., before he repurchased the company and sold it in 2008 to Canadian-based Cookie Jar Group.

Tata is just the latest Indian company to expand into Hollywood. In November 2007, Mubai-based Prime Focus acquired Post Logic Studios, a post-production services company based in New York and Los Angeles, and Canadian visual effects house Frantic Films VFX, which also had an office in Los Angeles.

Reliance, the Mumbai-based conglomerate controlled by Indian billionaire Anil Ambanim, is also bankrolling Steven Spielberg's DreamWorks studio and owns the Burbank post-production house Lowry Digital as well as a chain of U.S. theaters catering to the Indian community.

-- Richard Verrier