DreamWorks Animation Posts Quarterly Net of $5.6 MillionMichael White
DreamWorks Animation SKG Inc., the studio run by Jeffrey Katzenberg, posted a surprise quarterly profit and agreed to buy AwesomenessTV, a popular teen network on YouTube. The shares rose the most in seven weeks.
First-quarter net income fell 39 percent to $5.58 million, or 7 cents a share, from a year earlier, the Glendale, California-based company said yesterday in a statement. Analysts had projected a loss of 3 cents a share, the average of estimates compiled by Bloomberg. Sales fell 1.1 percent to $134.6 million, beating the $98.8 million average estimate.
DreamWorks Animation agreed to buy AwesomenessTV for $33 million in cash and as much as $117 million more through 2015 if earnings targets are met, according to a statement today. Katzenberg is diversifying the studio to be less dependent on a release schedule of two or three movies a year. He has set up a sister company in China to develop TV and live entertainment projects and is reducing its workforce to cut costs.
“The fundamentals of the company are very strong,” Katzenberg said in an interview. “We worked very hard to diversify our businesses and our revenues and they’re starting to pay off.”
DreamWorks Animation rose 7.3 percent to $20.69 at the close of New York trading. The shares have advanced 25 percent this year, compared with a 14 percent jump for the Standard & Poor’s 400 Midcap Index.
The first quarter benefited from higher home-video revenue, including $22.8 million from “Madagascar 3: Europe’s Most Wanted.”
The company’s latest theatrical hit, “The Croods,” took in $88.9 million at theaters in the U.S. and Canada by the end of the quarter following its March 22 release, according to researcher Box Office Mojo.
The film, made for $135 million, ranks second with $468.8 million in worldwide sales so far this year, behind “Oz the Great and Powerful” by Walt Disney Co. A new film, “Turbo,” is scheduled for release on July 17.
“The Croods” contributed $4 million of revenue in the quarter, DreamWorks Animation said. Second-quarter results “are expected to be driven by the performance of ‘The Croods’ at the worldwide box office,” the company said.
AwesomenessTV, through its Multi-Channel Network on YouTube, has aggregated more than 14 million subscribers and 800 million video views, according to DreamWorks Animation. It’s also expanding into TV and film, the company said.
Brian Robbins, founder and CEO of AwesomenessTV, will assume an executive role at the studio to develop a DreamWorks Animation branded digital family channel.
The company took an $87 million writedown in the fourth quarter on its previous film, “Rise of the Guardians,” released in November, after the movie failed to attract large audiences. The film was more successful in home-video release, contributing $9.6 million to the first-quarter results, the company said.
“We had a movie in ‘Guardians’ that we were really proud of and we expected it to be a success, and when it wasn’t, it really hurt,” Katzenberg said. “I don’t think anybody in our company lost confidence in our core business or our ability to execute.”