Thursday, April 28, 2016

Consummation

Now with the Add Ons.

Jeffrey's dream comes true.

On Thursday, Comcast (CCV) said shareholders in DreamWorks will receive $41 in cash per share of stock -- a roughly 50% premium from where the stock was trading before the merger talks were reported earlier this week.

Comcast said it expects the deal to pass regulatory muster and take effect by the end of the year. The deal is reminiscent -- albeit on a much smaller scale -- to Disney's 2006 acquisition of Pixar for $7.4 billion.

Both Comcast and DreamWorks are smaller than Disney and Pixar, respectively, but the ambitions are similar. Comcast said DreamWorks "will become part of the Universal Filmed Entertainment Group, which includes Universal Pictures, Fandango, and NBCUniversal Brand Development." ...

This deal has been a decade-plus in coming. Mr. Katzenberg has long known that being an animation division of a conglomerate is less nerve-wracking than being a stand-alone living release to release. (Two theatrical under-performers in a row and you're in trouble.)

In recent years, DreamWorks Animation has moved away from the Pixar model of releasing nothing but smashes because it's tough to do and DWA has had its share of non-hits. (Even Pixar has stumbled with recent release The Good Dinosaur.) DreamWorks Animation was expanding into television, on-line content and amusement parks, much as Walt Disney Productions did in the 1950s. The company was also beefing up its merchandising division.

But now the wobbly ground on which it's been walking the past few years will grow more solid. As of today it's not a stand-alone animation studio anymore, but part of the Universal family.

Add On: In exchange for getting a big new pile of money to stack atop the pile he already has, Jeffrey Katzenberg won't be running the DWA ship anymore.

Jeffrey Katzenberg, the Hollywood mogul whose name has been synonymous with DreamWorks Animation, will step down as chief executive after his company is sold to Comcast Corp.'s NBCUniversal.

After the deal closes, Katzenberg will become chairman of DreamWorks New Media, made up of the company’s stakes in Awesomeness TV and NOVA, NBCUniversal said Thursday. In addition, Katzenberg will serve as a consultant to NBCUniversal. ...

And the new kingping will be ...

With Jeffrey Katzenberg eventually stepping into a new role as chairman of DreamWorks Animation New Media, Chris Meledandri, who started Illumination Entertainment nine years ago, is officially and unequivocally the town’s animation czar. With the Minions and Despicable Me franchise successes alone, you could argue he already was. But after the announcement this morning of Comcast NBCUniversal’s agreement to acquire DreamWorks Animation for $3.8 billion in cash, all eyes have now turned to Meledandri. ...

So how will the structure of DreamWorks Animation change over time? Will current executives at the top, Ann Daly and Bonnie Arnold and Mireille Soria, stay on? How long before the wheelhouse changes some of all of its crew members? Hard to say. But I'm guessing that changes will be coming over the next eighteen months. It almost invariably happens. ...

Add On Too: Who could see this coming?

DreamWorks Animation has resumed trading up 24.2% -- hitting its highest level since 2010 -- after a halt tied to its $3.8B acquisition deal with NBCUniversal.NBCU parent Comcast (is off 0.4% after making the very Disney-like move. Speculation yesterday had turned to Comcast's interest in DWA focusing on what it could do for theme parks and consumer products rather than the film slate itself. ...

Add On Three: Trade papers proclaiming Mr. Meledandri the new King'Czar of Animation are being a wee bit ... ahm ... myopic. What is John Lasseter? A lightweight also-ran? There is one Czar in Cartoonland.


4 comments:

brandon smith said...

I have a LOT of questions about this deal, although I'm aware that the questions might me answered sometime down the road.

How will this effect DWA's current film slate with Fox? How will this effect their big Netflix deal? Who will steer the company now that Jeffery has stepped down as CEO. Who will be involved in the creative process for the films now? Jeffery had made a point to investors recently that he would be more hands-on with the filmmaking process of his films, so that's a big one to answer.

Also, DWA had announced plans to expand into live-action television. Is that going to be affected in any way?

There's a lot more questions that also need answers, but in any case, my hats off to Jeffery Katzenberg for finding the right company to be a part of. I was kind of hoping that Fox would make a commitment, but oh well.

Steve Hulett said...

Meledandri will be more involved over time, and Katzenberg less. I think pipelines will change in the next eighteen the thirty-six months.

The way these things usually go? Management will hold meetings with staff, assuring them that everybody is loved and there will be no layoffs. Then, some months later, layoffs will start happening.

I've seen this scenario happen over and over. Chris Meledandri is an out-sourcing kind of guy; he's the first creative exec who's made it work on the feature animation side. And Comcast-Universal will want to lower costs. I see the TV group, mostly pre-production, remaining intact, while the feature group will see significant changes.

Alex Dudley said...

My mind is racing as I'm so excited about all that can happen with this deal, both good and bad!

Based on a previous comment, do you really think it's likely that all in-house production for DWA will be outsourced (minus pre-production, of course)? Since DWA is one of the largest employers of animators in the country, how will this effect the industry?

With Comcast-Universal having a stake in Hulu, will they immediately terminate DWA's deal with Netflix? Will everything currently in development move to Hulu? Or will they just wait until their contract ends?

Will this effect the Dreamworks Channel's expansion plans? With a vast library of properties from both NBCU and DWA, will they launch a channel in the States?

This is huge! I can't wait to see what will come of this!

Steve Hulett said...

Understand that I know NOTHING about what is being planned inside Universal, but based on experience and what I know of the different corporate cultures: The new owners will look to get the costs of new features down. Illumination Entertainment creates their animated theatrical product for $80 million. DWA's recent movies have come in at $130 million, if reports are near right.

So I think more outsourcing of feature production is in the new DWA's future. (Doesn't mean that ALL production will be outsourced, just more than now.)

One employee told me Universal was interested in all of DWA's tv product, and that there were presentation for Universal execs late last year. (If so, negotiations were going on for a long while, no?) Wouldn't be a surprise if the company does more TV pre-production here in town, but time will tell.

But honestly? Anything could happen. All I'm doing is spit-balling possibilities. The folks who actually KNOW are deep in the Golden Circle. And aren't talking.



Site Meter