DreamWorks to take write-down
DreamWorks Animation on Wednesday acknowledged it would take a write-down on its recent film “Flushed Away.”
Although the Glendale studio provided no exact number, analysts estimated the movie’s loss could range from $40 million to about $90 million.
The disclosure came in a Securities and Exchange Commission filing for a $330-million secondary offering of shares by billionaire Paul Allen and other investors. Allen, Viacom Inc. and Lee Entertainment sold a total of 11.6 million Class A shares, according to the filing.
Later in the day, DreamWorks founders Jeffrey Katzenberg, David Geffen and Steven Spielberg moved to give the stock a vote of confidence by agreeing to each purchase $10 million worth of shares from underwriters Goldman, Sachs & Co. and Bear, Stearns & Co.
DreamWorks shares fell 30 cents, or 1.1%, to $27.91.
So far, the $143-million “Flushed Away,” about an upscale rat in London flushed into the city’s sewer system, has grossed only $47 million worldwide, according to the tracking service Box Office Mojo.
The movie’s performance does not bode well for the continuation of the studio’s partnership with Britain’s Aardman Animations, with which it co-produced “Flushed Away,” “Chicken Run” and “Wallace & Gromit: The Curse of the Were-Rabbit.”
Aardman’s films have not grossed as much as other DreamWorks movies such as “Shrek,” “Madagascar” and “Over the Hedge.” Despite winning an Oscar for best animated feature, “Wallace & Gromit” lost more than $30 million for DreamWorks.
DreamWorks executives declined to comment.
Aardman spokesman Arthur Sheriff said the studios would continue to work together. “Everything is fine,” he said.
DreamWorks still has the option to partner with Aardman on four additional movies. Last year, the studio bought the rights to make “Crood Awakening,” co-written by Monty Python alum John Cleese, with Aardman. That project is in development but has not been given the go-ahead. Sheriff said the companies were discussing future projects but did not elaborate.
Analysts expect better things in 2007 when the studio releases “Shrek the Third” and “Bee Movie,” which are expected to be strong at the box office.
“Flushed Away’s” “poor performance should not have any material impact on our 2007 estimates,” said Merrill Lynch analyst Jessica Reif Cohen.