DreamWorks Animation SKG Inc. (DWA), the independent film studio run by Jeffrey Katzenberg, rose as much as 8.6 percent after reporting a surge in second-quarter profit, driven by the hit movie “The Croods.”
The stock advanced 6.8 percent to $26.45 at 1:22 p.m. in New York after reaching $26.90 earlier, the highest intraday price since April 2011. DreamWorks Animation had gained 49 percent this year as of yesterday.
Net income rose 74 percent to $22.3 million, or 26 cents a share, Glendale, California-based DreamWorks Animation said yesterday in a statement. The results beat the 20-cent average of 11 analysts’ estimates compiled by Bloomberg. Revenue rose 31 percent to $213.4 million, surpassing the $188.9 million estimate.
“The Croods,” was released on March 22 in the U.S. and later in countries including China and France, generating $71.8 million in revenue in the quarter. The film, about a cave-man family discovering fire, has taken in $584 million worldwide, an amount split with exhibitors. It cost $135 million to make, according to the research site Box Office Mojo.
“DreamWorks Animation significantly outperformed in the second quarter,” Katzenberg, who is chief executive officer, said on a conference call yesterday. He called “The Croods” the company’s most successful original film since “Kung Fu Panda” in 2008.
The July 17 release “Turbo,” about a speedy snail who aspires to compete in the Indianapolis 500, opened to disappointing sales because mid-summer was crowded with big-budget and animated films, Katzenberg said.
“It was just a bad date,” he said.
The film has taken in $60.1 million in domestic theaters since its release, according to Box Office Mojo. The company may have to write down as much a $50 million on the movie, James Marsh, a Piper Jaffray Cos. (PJC) analyst in New York, wrote in a July 22 research note.
The film will be profitable in part because its production cost was lower than other DreamWorks releases, Katzenberg said. Strong international box office sales and consumer product revenue will add to the picture’s takings as will a deal DreamWorks announced in June with Netflix Inc. (NFLX) to distribute its movies on that company’s subscription video service.
“All of these things and a few other factors in it create an opportunity where we can have a film perform like this and be profitable for the company,” Katzenberg said.
DreamWorks Animation signed a five-year film distribution agreement with 21st Century Fox Inc. last August, ending a six-year pact with Viacom Inc. (VIAB)’s Paramount Pictures. The Fox deal allows DreamWorks Animation to keep domestic television revenue and reduces digital distribution costs.
Katzenberg has moved more aggressively into television production to lessen the dependency on films. DreamWorks Animation will generate $100 million in TV production revenue this year and $200 million by 2015, he said in June.
DreamWorks Animation said in separate statements yesterday that it hired Marjorie Cohn, a former executive at Viacom’s Nickelodeon channel, to head its television operations and Paul Kurzawa, chief operating officer of Los Angeles-based shopping-mall developer Caruso Affiliated, as head of retail development and entertainment.
The company also said it has reached an agreement with Hasbro Inc. (HAS), the world’s second-biggest toymaker, to distribute merchandise and games based on its upcoming films “B.O.O.: Bureau of Otherworldly Operations”, scheduled for release in 2015, and “Trolls,” slated for a 2016 opening.
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