Friday, July 04, 2008

A Future DreamWorks Animation Merger?

I've thought for a long time that, sooner or later, DreamWorks Animation would meld into the warm embrace of one of the conglomerates not named Disney.

Don't misunderstand. DreamWorks Animation has been hugely successful, but because it's a stand-alone company, it's business model is like, real challenging:

Manufacture a hit animated feature each and every time you make an animated feature.

This is, John Lasseter and Andrew Stanton to the contrary, sort of difficult to do. And DreamWorks Animation hasn't done it, but it's performed the feat of creating global blockbusters often enough (KFP being the most recent example) to prosper in the wacky world of Hollywood.

Jeffrey Katzenberg is on record as saying he has no intention or desire to take DreamWorks Animation down the road that Pixar has marched, selling its independence and becoming a division of a much larger corporate entity. But then I read this:

Just about everyone in Hollywood is waiting for the other shoe to drop in the Paramount-DreamWorks drama ... When and if that happens it won't exactly leave Paramount in the lurch. The Viacom studio (VIA) still has its lucrative distribution deal with DreamWorks Animation.

... But as in any decent Hollywood tale, there's a twist to this script. DreamWorks dealmaker par excellence David Geffen had the foresight to build an exit clause into the Paramount deal that lets DreamWorks Animation walk away nearly two years earlier than anticipated. The deal is set to expire on Dec. 31, 2012. But DreamWorks can bolt earlier, if it chooses, by selling a 35% stake in the company and telling Paramount by Jan. 1, 2011 that it wants out.

So there you are. An early exit clause, coupled with a 35% buyout (or higher), coupled with -- and I'm guessing here -- a long-term deal for Mr. Katzenberg to continue at the helm of DWA.

Makes huge sense to me. Especially because DreamWorks Animation remaining a stand-alone animation studio into the distant future makes way less sense.


Anonymous said...

I'm sorry but I don't really follow. Why would Paramount buy a 35% stake in a company that they would no longer be doing business with and would not benefit directly from any longer.

Anonymous said...

Seeing as how MOST of dreamworks films have not done particularly well, it's a large gamble for Paramount. And you can bet they'll have a say or two about what goes into the films. Jeffry is just another body. Just when Dreamworks is finding it's legs, too.

Anonymous said...

Actually, at this point, MOST of Dreamwork's films have done quite well, certainly enough to make a profit.

Anonymous said...

there may be a lot of anti Jeffrey people out there but the reality is the man deserves a lot of credit for sticking it out this long and making a go of it with SKG.

i have many friends that have been there for quite some time and in this industry that is not an easy thing. just look at Disney.

Katzenberg was a force at Disney and only now more than 10 years later does Disney have someone truly looking out for its animation interests.

even the almighty Pixar was not going to sustain its cash needs with out a much bigger corporation. thats why prior to Disney they were shopping their distribution deals that could of easily have been acquisition offers.

going to disney was there best choice, not because of the disney brand that has been beat up over the last 5 years but the disney global reach of distribution and marketing.

I wish Dreamworks all the best and if they can deliver films like KFP they'll be fine.

Steve Hulett said...

I'm sorry but I don't really follow. Why would Paramount buy a 35% stake in a company that they would no longer be doing business with and would not benefit directly from any longer.

Because they would up their 8% distribution fee to 35% of the whole enchilada, that's why.

But this isn't just about Paramount buying, it's anybody buying. And it isn't simply about profits, but also cash flow. Even Bee Movie, generally regarded as an underperformer, mad $235 millionin world wide grosses.

DreamWorks Animation has become a strong brand name for audiences, and it's now turning out more films than Pixar. Madagascar hits multiplexes this Fall.

Say what you like about Jeffrey Katzenberg, he's now worth as much as his old nemesis Michael Eisner. (Disney artists had gags up on the walls just after he left, goffing about what Jeffrey would be doing next. I remember one that had Mr. K. in a realtor's blazer, aggressively selling real estate to a dubious couple.)

Jeffrey is a looong way from having to sell tract homes. He's done quite nicely. So has DreamWorks Animation.

Anonymous said...

Unfortunately it's too easy to deride Katzenberg, but any serious animation historian should accept the fact that after Walt he is the biggest reason why animation still exists at all. He was almost solely responsible for resurrecting Disney 2D animation from the blackhole that Disney mangement (and even the 9 old men) had driven it into and then when he was booted out of there by his jealous boss he started up a rival studio that caused a bidding war that allowed animation salaries to finally rise way above the union payscale (of course, those salaries have since lowered, but for that one brief shiny moment in time...).
He has also proven that not only Disney could have BIG animation hits (not like during the 90s when only Disney could have a hit) and that made it more interesting for other studios to get interested in taking chances with animation.
In a lot of ways even Pixar owes him. If He hadn't made Disney a success during the 90s then they may never had the chance to even make Toy Story.
Of course, he didn't do it alone, but without his tremendous support of animation I think we'd be looking at an entirely different landscape now.

Anonymous said...


Anonymous said...

Jeffrey K. was real involved with Toy Story. He was still at Disney while it was being made.

Guess who had Pixar redo major pieces of its first story pass?

Anonymous said...

Jeffrey also saved Aladdin. I'm sure many here have heard about the "Black Friday" when he looked at the storyboards for the Aladdin feature and demanded that the writers throw the whole thing out and start over. He also "got" why Disney's films have such a special place in people's hearts: he believed that every good Disney film has a "moral resonance" that stands the test of time. For these and other reasons, driving Katzenberg away was one of Eisner's dumbest moves. Next to nearly losing Pixar and buying the muppets. :P

Anonymous said...

The BEST part of all of this is we get to see some WAY cool cartoons! Isn't it great to see all these neat, well animated, and beautiful films coming out of Dreamworks, Pixar, Disney, and others? I can't WAIT to see who will surprise me next. Cartoons are cool.

Anonymous said...

I cant wait to see Disney come out with a cool animated film again. its been about 6 years.

Anonymous said...

"Because they would up their 8% distribution fee to 35% of the whole enchilada, that's why."

Still not following you. It wouldn't up any distribution fee because the whole point would be to get out of their distribution deal early. I apologize for the ignorance and I'm not trying to stir up any trouble. I'm just trying to understand.

Anonymous said...

Dreamworks doesn't HAVE brand recognition with audiences. If you believe they do, I'd love to know what planet you're from. They make good films, fine. But BRAND recognition? Hardly. Now that they're just starting to get their heads above water, they should start working on their brand.

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