Tuesday, October 07, 2014

Pursuit of a Sale

BuzzFeed reviews what's been obvious.

... For the first time in his 40-year movie career, [Jeffrey] Katzenberg’s performance is being seriously questioned by both Wall Street analysts and Hollywood peers. As an independent studio not tethered to a larger organization in the cost-heavy field of animated movies, his studio [DreamWorks Animation] is overly dependent on the box office performance of individual films to meet its financial targets. Further, DreamWorks Animation’s business model of only producing two to three movies per year has suffered from the dual realities of increased competition in family films and an overall downward trend in attendance at the domestic box office. ...

As a movie studio executive who also requested anonymity said, “When you only make two movies a year, you better make sure one of them isn’t a flop otherwise you’re in trouble.” ...

According to a story in last week’s Hollywood Reporter, Katzenberg may have personally sabotaged the deal with Softbank by trying to leverage it into a richer offer from Rupert Murdoch’s 21st Century Fox. ...

Jeffrey Katzenberg is a smart man. He wants to sell his company to the highest bidder and springboard to the next level, but he's hemmed in by some cold realities.

1) Most of the big entertainment conglomerates have fully functioning animation division, and aren't looking to add another one at a steep price.

2) Most CEOs in movie land aren't angling to buy another movie company, especially if it means they have to step aside at a future date for Mr. Katzenberg.

3) Most large corporations who want to own DWA, aren't in the mood to overpay for the privilege of owning it.

I don't think Jeffrey "sabotaged" the deal with Softbank, not purposely anyway. The deal might have soured because Mr. Katzenberg attempted to sweeten the it too much. Pressing hard for the last dollar sometimes causes merger talks to unravel.


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