Entertainment Industry

Category: DreamWorks Animation

DreamWorks Animation posts 26% jump in revenues in first quarter

Madagascar

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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DreamWorks Animation consider distribution options

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-- Richard Verrier

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

DreamWorks Animation joins Wal-Mart disc-to-digital launch

PussBoots
DreamWorks Animation is joining Wal-Mart's disc-to-digital service as it launches today.

The Glendale studio will make all of its previously released DVDs, including the "Shrek" and "Madagascar" series and "How to Train Your Dragon," available for consumers to convert into digital copies stored on Wal-Mart's Vudu service.

It's the sixth Hollywood studio to join with Wal-Mart, which will charge $2 to make a copy of a movie in the "cloud" that can be accessed from any compatible digital device ($5 to convert the movie to high-definition). It launches Monday in about 3,500 Wal-Mart stores across the U.S.

The lone holdout among the major film companies is Walt Disney Studios. However DreamWorks is the first independent to take part -- Lionsgate and The Weinstein Co. are also not yet participating.

Getting as many studios to particpate -- and to offer as many of their movies as possible -- is critical for Wal-Mart in growing the service, which it hopes will help stem declining revenue from DVD sales. The more movies from their shelves that they find they aren't able to convert to digital, the more discouraged potential customers are likely to be.

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-- Ben Fritz

Photo: A scene from "Puss in Boots." Credit: DreamWorks Animation.

DreamWorks Animations' Jeffrey Katzenberg gets pay cut in 2011

DreamWorks Animation Chief Executive Jeffrey Katzenberg

DreamWorks Animation Chief Executive Jeffrey Katzenberg took home a relatively modest pay check in 2011 -- at least compared to his peers in the entertainment industry.

In addition to his usual $1 annual salary, Katzenberg, who controls 68% of the voting shares of the Glendale-based company, received a stock award valued at about $4 million. That's down from a total compensation of $6.7 million in 2010 and $23 million in stock options and awards he received in 2009, according to a filing with the Securities and Exchange Commission.

Katzenberg's pay was well below that of David Zaslav, CEO of Discovery Communications Inc., who got a 23% raise in 2011 with total compensation of $52.4 million. Robert Iger, CEO of Walt Disney Co., received nearly $31.4 million in total pay last year, up 13.6 % from 2010, while Viacom Inc.'s Philippe Dauman received $43 million, according to federal filings.

As part of a 2009 employment agreement, Katzenberg's pay is tied to the company's shareholder return.  DreamWorks Animation shares declined more than 40% last year. DreamWorks paid co-founder David Geffen $1.1 million for use of a corporate jet and $2 million in consulting fees in 2011, according to the proxy.

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-- Richard Verrier

Photo: DreamWorks Animation Chief Executive Jeffrey Katzenberg poses with the character Shrek during a media event before the premiere of "Shrek the Third" in June 2007 in Paris. Credit: Jacques Brinon / Associated Press

 

 

DreamWorks Animation's fourth-quarter earnings drop sharply

Kung Fu Panda 2
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.

RELATED:

DreamWorks Animation unveils China studio plans

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DreamWorks Animation partners with China's leading online video site

-- Richard Verrier

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

DreamWorks Animation unveils China studio plans

DreamWorks Animation announced plans to build Oriental DreamWorks, a studio in Shanghai, in what it billed as a landmark joint venture agreement with two state-owned Chinese media companies
DreamWorks Animation on Friday announced plans to build a studio in Shanghai, in what the Glendale-based company billed as a landmark agreement with two state-owned Chinese media companies.

The creator of the "Shrek" movies said it was forming 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 -- 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, TV shows and other entertainment catering to the China market. The deal was among several business ventures announced in downtown Los Angeles during an economic forum attended by visiting Chinese Vice President Xi Jinping, who is widely expected to be the country's next leader.

"We share the same vision with DreamWorks Animation to build a world-class family entertainment company," Ruigang Li, chairman of China Media Capital said in a statement. "Oriental DreamWorks will be a unique position to create high-quality content and interactive entertainment products for China and international markets."

The new studio, which has been recruiting some staff in Hollywood, plans to begin operations later this year and could eventually surpass the size of DreamWorks' headquarters, which employs more than 2,000 people, Chief Executive Jeffrey Katzenberg said in an interview.

"Our objective is to build an animation studio that is competitive with what we’re doing here," Katzenberg said. "We already have people working on over a half-dozen projects."

The studio eventually hopes to produce one animated feature film a year, with its first release set for 2016. Additional animators will be hired locally to accommodate the new China facility, Katzenberg added.

The joint venture is the latest push by Hollywood to mine the world's largest country. Last year, DreamWorks signed a deal with online video site Youku.com to distribute the studio's popular "Kung Fu Panda" movies in China. Beverly Hills-based RealD also has partnered with Beijing SAGA Luxury Cinema Management Co. to equip the Chinese theater chain with 3-D technology. Production companies Relativity and Legendary East also have unveiled new ventures to co-finance and release movies in China.

"When you look out five to seven years from now, China will be the No. 1 media market in the world," Katzenberg said. "It’s a huge opportunity for us."

Major Hollywood studios have been frustrated, however, by rampant intellectual-property piracy in China, as well as restrictions the government places on the number of foreign films it allows into the country, and how much revenue foreign studios can share.

Talks between U.S. and Chinese officials to ease those restrictions have heated up this week, raising the possibility that an agreement could be reached during Xi's U.S. visit.

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U.S. film producers are engaging the Chinese

Warner Bros. to distribute films in China on cable TV

DreamWorks Animation partners with China's leading online video site

-- Richard Verrier

Photo: Logo of Oriental DreamWorks, a new joint venture between DreamWorks Animation and Chinese media companies. Credit: DreamWorks Animation

DreamWorks Animation shares rise on strong box office for 'Puss in Boots'

Pussboot
Shares of DreamWorks Animation jumped 12% on Monday after the studio's movie "Puss in Boots" topped the box office for the second consecutive weekend.

The DreamWorks film about a feline outlaw voiced by Antonio Banderas pulled in a surprisingly strong $33 million over the weekend, with ticket sales slipping a mere 3% compared with last week. Movies usually drop substantially more in their second weekend, suggesting that "Puss in Boots" could have more staying power than was initially anticipated.

Investors responded by pushing up the company's shares to $19.47. The gain was more than enough to make up for the loss last week when Wall Street responded coolly to the lower-than-anticipated box-office opening of "Puss in Boots.'"

The spinoff of the studio's hit "Shrek" films generated $34.1 million in ticket sales during its first week. That was well below the $40 million to $45 million that most media analysts were expecting. Studio executives had attributed part of the lackluster opening to poor weather in the Northeast and the World Series. 

The strong second-week performance, however, suggests "Puss in Boots" is benefiting from positive word of mouth. The film has already collected $75.5 million in North America.

"This is a major comeback for the movie after a disappointing opening weekend,'' said James Marsh, an analyst with Piper Jaffray & Co. "People probably jumped the gun in terms of writing this one off. It's likely that it will continue to play well."

DreamWorks worldwide marketing chief Anne Globe told The Times today: "We always had a two-weekend launch strategy for 'Puss in Boots.' To have this strong of a hold is pretty unprecedented, and it's a testament to how much audiences loved the movie."

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-- Richard Verrier

Photo: title character in "Puss in Boots." Credit: DreamWorks Animation

DreamWorks Animation stock drops after debut of 'Puss in Boots'

Pussboot
Shares of Glendale-based DreamWorks Animation dropped Monday after the company's latest film, "Puss in Boots," opened this past weekend to softer-than-expected results. 

DreamWorks Animation shares fell 8% on Monday as investors responded coolly to the box-office debut of "Puss in Boots," a spinoff of the studio's hit "Shrek" films that features the voices of Antonio Banderas and Salma Hayek.

With a production budget of about $130 million, "Puss in Boots" generated $34.1 million at the box office over the weekend. Although it was No. 1 movie, ticket sales were well below the $40 million to $45 million that most Wall Street analysts had forecast.

"This is the lowest opening weekend of any DWA CG animated feature since 'Antz' in 1998,'' said Doug Creutz, an analyst with Cowen and Co., in a report to investors. "We believe the performance of 'Puss' is further evidence that increasing competition in the animated film space significantly degraded the domestic box office potential for individual animated films."

In a research note titled "Hairball," Creutz revised his domestic box office estimate for "Puss in Boots" from $154 million to $120 million but maintained his neutral rating on the stock.

Richard Greenfield, an analyst with BTIG Research, who has a "sell rating" on the stock, said that wintry weather in the Northeast may have negatively effected the opening of "Puss in Boots," but wrote in a blog that the film’s opening weekend in the U.S. and Canada was "well below our and consensus expectations."

Even if the film has some staying power, it "may have difficulty reaching our $157 million domestic box office estimate, which is well below consensus," said Greenfield.

DreamWorks Animation, which releases at least two films a year, remains a market leader in the industry but has been squeezed by an industry-wide slowdown in DVD sales and growing competition from other studios in the family film business.

In its most recent quarter, DreamWorks performed better than expected, although its profit fell 51%, which the studio attributed to the timing of its releases. 

The company's shares closed Monday at $18.56, down from the company's 52-week high of $37.74 in November.

DreamWorks executives declined to comment on the investor reports, but cited the effect of storms in the Northeast and the World Series on Friday on the opening of "Puss in Boots" and predicted the movie would build momentum.

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'Puss in Boots' showcases work by India animators for DreamWorks

— Richard Verrier

Photo: the title character of "Puss in Boots." Credit: DreamWorks Animation.

 

 

DreamWorks Animation plans to open studio in China

Kung Fu Panda 2

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.

RELATED:

DreamWorks Animation partners with China's leading online video site

Warner Bros. to distribute films in China on cable TV

U.S. film producers are engaging the Chinese

--Richard Verrier

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

DreamWorks Animation partners with China's leading online video site

Kung Fu Panda 2
 
DreamWorks Animation has become the second Hollywood studio to enter into a distribution agreement with China's top online video site, Youku.com.

Youku said Monday that it had signed a deal with the Glendale-based animation studio to distribute the "Kung Fu Panda" movies in China, marking the first time that DreamWorks releases have been made available in that country through the Internet.

Both of the previously released "Kung Fu Panda" films, which were hugely popular in China, will be immediately available on Youku's premium on-demand service for less than $1. The movies will subsequently be available for free viewing on Youku's Hollywood Movie Channel.

The deal comes two months after Warner Bros. reached an agreement with Youku to stream 450 of the studio's movies, including the "Harry Potter" and "Lord of the Rings" series with Chinese subtitles, on its website for a charge of 46 cents to 77 cents.

To compete against rampant piracy, Youku makes its content cheaper than bootleg DVDs, which cost about $1.50 in China.

"As technology matures and Chinese internet users increasingly turn to the Web for entertainment, Youku has been able to expand on the traditional movie release road map through agreements for studio films such as 'Kung Fu Panda' and 'Kung Fu Panda 2,'" said Victor Koo, chairman and chief executive of Youku. "Both titles have a proven track record of success with Chinese audiences."

The "Kung Fu Panda" pictures, which feature scenery and landscapes inspired by traditional Chinese art and architecture, scored big at the box office in China. "Kung Fu Panda" was the No. 1 movie in China in 2008, while the sequel has grossed more than $92 million.

"Youku is an innovative company with extraordinary reach in China, and we are thrilled that the "Kung Fu Panda" features will now be offered through their platform, which presents high-quality content to consumers online," said Kelley Avery, head of worldwide franchise strategy and distribution for DreamWorks Animation. 

Meanwhile, in another sign of China's allure to Hollywood, Beverly Hills-based RealD announced that will partner with Beijing SAGA Luxury Cinema Management Co. to equip the Chinese theater chain with 3-D technology. The RealD agreement will add 100 3-D-capable auditoriums, the partners said. SAGA said it plans to install RealD 3-D technology in up to 20 theatres around the country within three years.

In November, RealD announced a deal with Wanda Cinema, China's largest theater operator, to add up to 500 3-D screens in the country.

Earlier this month, production companies Relativity and Legendary East also announced new ventures in China to co-finance and release movies.

RELATED:

Warner Bros. to distribute films in China on cable TV

U.S. Film producers are engaging the Chinese

Imax reaches deal to open more big screens in China

-- Richard Verrier

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

Disney stock closes down 9%

Mickey Mouse


On a day when stock markets sagged, Walt Disney Co.'s stock fell even lower.

Disney shares closed at $31.54, down 9% in trading Wednesday -- even though the entertainment conglomerate just reported third-quarter earnings Tuesday that beat consensus estimates among analysts.

Beneath the seemingly good quarter, analysts noted that the film studio and interactive media group missed projections and that advertising revenue from cable network advertising was up a modest 2%, lower than some had forecast. Theme park margins also declined because of a land sale in Europe and continued financial reverberations from Japan's earthquake.

Disney also warned that three items would affect results in the fourth quarter: Lower projected DVD sales for the film studio compared with a year earlier, lower sales of syndicated TV shows and higher costs at ESPN.

"Disney has not lived up to the earnings-beating behavior it is known for," wrote media analyst Michael Nathanson of Nomura Equity Research.

Among the few entertainment stocks to buck Wednesday’s downward trend were Lions Gate Entertainment and DreamWorks Animation. Lions Gate saw its shares rise 2% to $6.74 the day after it reported stronger than expected net income and as the New York Times reported that it is considering launching a cable channel branded with filmmaker Tyler Perry. Shares in DreamWorks Animation rose 2% to $18.77.

A Disney spokeswoman declined comment.

-- Dawn C. Chmielewski and Ben Fritz

Photo: Minnie and Mickey Mouse celebrate Tanabata, or the Star Festival, at Tokyo Disneyland. Credit: Yoshikazu Tsuno / AFP/Getty Images


 

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