Friday, April 29, 2016

What's In The DWA deal For Comcast?

Deadline editor David Lieberman answers his own questions:


DWA’s animation operations will become part of Universal Filmed Entertainment Group while co-founder and CEO Jeffrey Katzenberg consults for NBCUniversal and becomes chairman of DreamWorks New Media — a potential spinoff candidate. He’s scheduled to talk with analysts on May 5, when DWA releases its Q1 earnings.

Here’s the apparent rationale for the deal, and state of play for the newly engaged companies:

Q: Why does Comcast want DWA?

A: Executives say that DWA will help NBCUniversal’s film animation and consumer products businesses, develop characters for theme park attractions, and provide TV shows for kids.

Q: That’s it?

A: DWA is cheap.

Q: Cheap? Analysts say that Comcast’s paying a high price for DWA.

A: This depends on your perspective. True, the $41-a-share offer is 51% higher than DWA sold for before news about the talks leaked. But the studio’s shares were beaten up in the beginning of 2014, and have been stuck in neutral since then.

Q: Still, $4.1 billion is a lot of money.

A: Comcast can buy DWA without breaking a sweat. It has a market value of nearly $150 billion, making it 36.5 times bigger than DWA. The cable giant says the deal won’t interfere with its vow to spend $5 billion this year repurchasing shares. It apparently didn’t hire an investment bank to help with the deal. And its investors don’t seem to care: Comcast shares are up less than 1% since Tuesday. ...

I would say the answer is simple.

Universal had a good movie year, but it would like more rides and characters to populate its amusement parks. It desires more merchandisable brands and sees how profitable and effective cross-purposing and "synergy" is for Disney.

If the House of Mouse can make itself a mint doing these things, why not the House of Uncle Carl Laemmle and Woody Woodpecker? Other conglomerates are catching wise to the Disney corporate model and striving to emulate it. Right down to having one animation exec run two studios.


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