DreamWorks Animation posts big loss in fourth quarter

DreamWorks Animation posted a loss of $263.2 million in the fourth quarter, as the company was buffeted by restructuring costs and impairment charges from its recent film releases.

The Glendale studio said it lost $3.08 cents per share in the quarter ended Dec. 31, compared to a profit of 20 cents a share during the same period a year ago. The company's fourth quarter revenues of $234.2 million increased 15%.

The results were worse than analysts had expected. Analysts surveyed by Thomson Reuters estimated a net loss of $3.01 a share and revenue of $246 million in the quarter.

“Although 2014 was a challenging year for our company, I am confident that our recent announcement to restructure our feature film business will enable us to deliver great films and better box office results, while improving the overall financial performance of our business,” Chief Executive Jeffrey Katzenberg said in a statement. “We have a set of strategic imperatives in place designed to ensure sustainable and profitable growth over the long term.”

In a move to cut costs,  Katzenberg told analysts in a conference call that the company would sell and lease back its plush Tuscany-style campus in Glendale that has long been a point of pride for the studio.

The fourth quarter results included $210.1 million in restructuring costs, including $54.6 million related to employee termination costs and other contractual obligations and $155.5 million primarily related to write-offs from unreleased films, including "B.O.O." and "Monkeys of Mumbai," as well as other charges, the company said in a statement.

The losses come in the wake of a major downsizing and management shakeup at the studio. Last month, the company announced it would cut 500 jobs, shake up top management and scale back film production after a string of box office misfires.

The moves were part of a sweeping restructuring of the studio's core feature animation business that has suffered mounting financial challenges in recent years. DreamWorks Animation has struggled from a string of weak-performing movies and faces growing competition from rivals that have been able to produce animated movies at lower cost.

The studio previously said it would take a $290-million charge in connection with the layoffs and an additional $55 million in film-related impairment charges, mainly for the recently released "Penguins of Madagascar" and last spring's movie "Mr. Peabody & Sherman," for which DreamWorks already took a $57-million write-down last year.

“Penguins of Madagascar,” which was released in November, grossed $82.7 million domestically and $275 million overseas, well below that of other "Madagascar" films.

Under pressure to improve results, Katzenberg has overhauled management at the studio. Longtime executive Bill Damaschke, the studio's chief creative officer was ousted, along with Chief Operating Officer Mark Zoradi, a former Disney executive who had been with the company just six months; marketing director Dawn Taubin; and Vice Chairman Lewis Coleman.

Veteran producers Bonnie Arnold and Mireille Soria have taken over as co-presidents of feature animation.

The new executive team has been reevaluating the studio's upcoming film slate and process for developing animated movies.

In another blow to DreamWorks, the studio on Sunday also lost the Oscar for best animated feature for the critically acclaimed “How to Train Your Dragon 2.″  The Oscar went to "Big Hero 6," from rival Walt Disney Studios, which also won for last year's hit film "Frozen."

Copyright © 2016, Los Angeles Times
45°