DreamWorks Animation SKG Inc. posted fourth-quarter profit that beat analysts’ estimates, reflecting growth from its TV and home video businesses as the maker of “Kung Fu Panda” movies restructures its struggling movie operation. Shares rose. ...
The positive earnings report is a shot in the arm for DreamWorks Animation, led by Chief Executive Officer Jeffrey Katzenberg, which last year cut 500 jobs, shelved films and sold its campus in California following several disappointing features. A shift in strategy may be starting to pay off: The company has grown its TV business, focusing on home-video releases and making shows for Netflix Inc., including “Dragons: Race to the Edge” and “Dinotrux.” Its only 2015 theatrical release, “Home,” contributed $55.3 million to feature film segment revenue in the fourth quarter -- primarily from TV and home video.
Katzenberg, on a call with analysts Tuesday, said the company was driving film production costs below $130 million, with a goal to be in the range of $120 million starting with its next release, “Trolls.” ...
Fourth-quarter revenue from DreamWorks’ TV segment was $104.9 million, compared with $50.7 million a year earlier, because of a higher number of episodes delivered under licensing deals, among other things. ...
DreamWorks Animation has been expanding out from its core business, and it looks to be working.
Three years back, DWA launched its partnership with Netflix, beginning with Turbo Fast based on the feature, and then expanded that beachhead to 300 hours of new series programming. Since then the Netflix-DreamWorks alliance has expanded globally, and it's bearing profitable fruit for the Glendale cartoon company.
Six years ago, DreamWorks Animation had a simple business model: Produce-hit-features-nonstop. Turns out that's a wonderful aspiration, but it's hard to execute in the Real World. (Even Pixar slams up against the occasional under-performer.)
Happily, three years ago DreamWorks Animation came to its senses and commenced building new businesses. It put together a television facility to turn out TV series. It beefed up its merchandising arm. And the last piece? The company is carving a better pathway to profitable theatrical features by bringing those features' costs down.
All of these things contributed to DreamWorks Animation's fourth quarter performance. Revenue jumped 36% to $319.3 million, crushing the $274 million consensus estimate, which should set DreamWorks Animation stock on an upward trajectory.
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