Katzenberg chatty on 3-D and ‘Kung Fu Panda 2,’ silent on HBO and Paramount
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Jeffrey Katzenberg punted questions about DreamWorks Animation’s uncertain future with distributor Paramount Pictures and pending deal with Netflix, focusing instead on the soft domestic performance of ‘Kung Fu Panda 2’ and the future of 3-D.
‘A terrible, terrible calamity,’ is how Katenzberg described the domestic performance of ‘Kung Fu Panda 2.’
The comments from the Glendale studio’s chief executive came on a conference call with analysts Tuesday after the release of financial results that pleased Wall Street. DreamWorks’ revenue of $218.3 million in the quarter ended June 30 was well above most analysts’ estimates, sending the company’s stock up 4%.
However, those looking for information regarding several looming questions about the company’s future were left disappointed. This month, Viacom’s Paramount Pictures announced it will produce its own animated movies beginning in 2014 and confirmed it will only continue to release DreamWorks Animation pictures at that point for a higher cut of revenue.
That probably won’t be acceptable to Katzenberg, whose agreement with Paramount expires at the end of 2012.
But the CEO declined to comment on what Paramount’s move would mean for his studio. ‘Our current agreement goes on for another year and a half, and what we are not going to do is move prematurely to try and answer a question that does not need to be answered yet,’ he said.
He also declined to address reports that DreamWorks will in 2013 end its pay television deal with HBO and sign an exclusive contract with Netflix.
Katzenberg was loquacious on the disappointing $160-million domestic box office take for May’s ‘Kung Fu Panda 2. ‘ He blamed it on the stronger-than-expected opening of ‘The Hangover Part II’ on the same weekend. That movie played to a broader audience than most R-rated comedies and took in $103.4 million over the four-day Memorial Day weekend, compared with $60.8 million for ‘Kung Fu Panda 2.’
Internationally, ‘Kung Fu Panda 2’ has grossed a much stronger $440 million.
He also expounded on the state of the 3-D market. Katzenberg, who has been an outspoken proponent of the technology for the last few years, admitted that America’s interest has slipped. ‘There has been too much extreme on the optimistic side of it, and I’m probably somewhat to blame for that,’ he said. However, he noted that 3-D continues to be very popular overseas and said the cost of making images pop out of movie screens, currently less than $10 million, makes it profitable.
‘Even at its levels today, [3-D] is one of best returns on investment of anything DreamWorks Animation has done,’ he said.
‘Kung Fu Panda 2’ contributed $55.8 million in revenue to DreamWorks Animation, driven by box office, merchandise and licensing. Last November’s ‘Megamind’ generated $19.7 million as it sold an unimpressive 4.3 million DVDs, in line with its soft box office performance
Net income for the quarter was $34.1 million, in line with Wall Street’s expectations.
The studio’s next release is the ‘Shrek’ spin-off ‘Puss in Boots’ in November.
Before rising in after-hours trading, DreamWorks Animation stock closed down 2% at $21.57 on Tuesday. Its shares are down 29% from a year-to-date high of $30.52 in February.
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-- Ben Fritz