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Katzenberg to relinquish DreamWorks Animation CEO role after Comcast deal

Katzenberg to relinquish DreamWorks Animation CEO role after Comcast deal
Dreamworks CEO Jeffrey Katzenberg (Julie Jacobson / Associated Press)

Jeffrey Katzenberg, the Hollywood mogul whose name has been synonymous with DreamWorks Animation, will step down as chief executive after his company is sold to Comcast Corp.'s NBCUniversal.

After the deal closes, Katzenberg will become chairman of DreamWorks New Media, made up of the company's stakes in Awesomeness TV and NOVA, NBCUniversal said Thursday. In addition, Katzenberg will serve as a consultant to NBCUniversal.

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The proposed sale of DreamWorks Animation to Comcast for $3.8 billion would not only signal further consolidation in Hollywood, it probably also would mark the end of Katzenberg's long tenure as head of the studio he built into a powerhouse with such hits as "Shrek" and "Kung Fu Panda."

Selling the studio to Comcast's NBCUniversal would provide a stable and secure home for DreamWorks Animation, especially since the studio has stumbled at the box office in recent years.

"I am proud to say that NBCUniversal is the perfect home for our company," Katzenberg said in a statement. "As for my role, I am incredibly excited to continue exploring the potential of AwesomenessTV, NOVA and other new media opportunities, and can't wait to get started."

But Katzenberg, 65, would no longer be in charge of the studio he has run for more than two decades. The Times reported earlier Thursday that he may take on an unspecified role at the company, according to two people familiar with the matter not authorized to speak publicly.

Katzenberg has spent years trying to secure a future for his studio. Though previous attempts to sell to Japanese telecommunications giant SoftBank and Pawtucket, R.I., toy maker Hasbro both fizzled, analysts were more optimistic that a deal with Comcast might materialize, citing potential benefits to both companies.

"It represents a ferocious dedication on the part of Jeffrey to keep the company afloat," said Los Angeles entertainment industry attorney Ken Kleinberg. "Jeffrey is maybe ready to step down and not have these burdens anymore.... He'll be exiting on a high note."

Comcast, which is based in Philadelphia, runs a huge cable business, broadcaster NBC, movie studio Universal Pictures and theme parks. It had been unclear where Katzenberg would fit in the new corporate machine if he were to stay.

Universal already has a successful animation business in Illumination Entertainment, whose chief executive, Chris Meledandri, has developed a reputation for making hit movies at lower costs than the typical computerized films.

Illumination had a big hit last year with "Minions," which cost $74 million to make. DreamWorks films regularly cost more than $100 million to produce.

"He's run his own show for years now," Eric Handler, an entertainment analyst at MKM Partners, said about Katzenberg. "I can't imagine he'd want to have a boss at this point in his life."

Some analysts, however, said Katzenberg could hold value for Comcast because of his creative vision in leading DreamWorks and the relationships he has forged in businesses that have become increasingly important to the film industry — namely digital services and the burgeoning Chinese film market.

"There's a lot of things he can bring based on his vision and relationships that are hard to quantify in monetary terms," said Tuna Amobi, an analyst at S&P Global Market Intelligence. "My instinct would be that they might want to keep him around in some capacity. He's been more of a visionary in the animation space."

Jason Schloetzer, a Georgetown University accounting professor and corporate governance expert, said Comcast may want to hold onto Katzenberg for several years as his company adjusts to new ownership.

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"He's one of the creative forces behind DreamWorks, and he's a key portion of the generation of future content," Schloetzer said.

It remains to be seen what his role will look like. Jeff Shell was named head of Universal Pictures in 2013 and is riding high after a record year at the box office. NBCUniversal Vice Chairman Ron Meyer has nearly two years left on his contract.

And Katzenberg, worth more than $1 billion according to the Los Angeles Business Journal, stands to reap a substantial sum from the proposed sale. Additionally, he would receive about $21.9 million if he leaves the company after a change in control, according to a regulatory filing. He controls 60% of the firm's voting shares.

The former Disney executive founded the DreamWorks studio with director Steven Spielberg and music mogul David Geffen in 1994. While DreamWorks never reached the ranks of the major Hollywood studios, the animation division, spun off in 2004, became a main rival of Disney by launching such franchises as "Shrek" and "Madagascar." In recent years, DreamWorks has struggled to consistently deliver hits in the animated family genre it once dominated, suffering from duds such as "Turbo" and "Mr. Peabody & Sherman."

But it has partly regained its footing with hits such as 2015's "Home" and this year's "Kung Fu Panda 3," which did particularly well in China. Katzenberg has also worked to diversify the business by making inroads in digital media through DreamWorks' output deal with Netflix and its stake in the YouTube network AwesomenessTV. That has helped calm investor concerns, driving its stock price up 25% in the last 12 months. The shares soared 19% to $32.20 on Wednesday.

In February, Katzenberg said on a call with analysts that the company was "taking the right steps to best position the company for long-term success."

As for life after DreamWorks, Katzenberg would have plenty of options. The New York native is known for throwing his weight around in philanthropy and politics, for example. The longtime Democratic supporter has raised funds for candidates including President Obama and Hillary Clinton, and is known to corral fellow industry heavyweights during election season.

Katzenberg last year made a $1-million donation to Priorities USA Action, a group that supports Clinton in the presidential race.

Times Staff Writers Meg James and Richard Verrier contributed to this report.

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