DreamWorks Animation takes $57-million write-down for ‘Mr. Peabody’
DreamWorks Animation SKG Inc. said it took a $57-million write-down for its latest animated feature, “Mr. Peabody & Sherman,” after the movie’s weak box-office performance.
The write-down contributed to the Glendale studio’s net loss of $42.9 million, or 51 cents a share, on revenue of $147.2 million in the first three months of this year. That compares with a profit of $5.6 million, or 7 cents, on revenue of $134.6 million in the year-earlier period.
The results were far worse than analysts’ projections for a loss of 14 cents a share in the quarter.
“Mr. Peabody & Sherman,” which was released March 7, has grossed $261 million at the worldwide box office to date, well below that of a typical DreamWorks Animation movie.
“The box-office shortfall of ‘Mr. Peabody & Sherman’ is evidence of the current challenges we face within our feature film segment, and restoring the strength in our core business is my No. 1 priority today,” Jeffrey Katzenberg, chief executive of DreamWorks Animation, said in a statement.
“Our next film is ‘How to Train Your Dragon 2' on June 13 … and I am confident that its performance will put us back on track to once again reach the levels of box-office success that we’ve achieved historically.”
From “Lion King” director Rob Minkoff, “Mr. Peabody & Sherman” is based on the popular characters from the 1960s animated television series “The Rocky and Bullwinkle Show.” It was the first DreamWorks animated movie to feature characters from the “Classic Media” library since DreamWorks acquired it in 2012.
The movie was the latest box-office misfire for DreamWorks Animation, which has had a bumpy track record over the last two years.
Its 2013 movie “The Croods” was a hit, but the studio took a $13.5-million charge this year on its animated movie “Turbo.”
Last year the studio took an $87-million write-down for “Rise of the Guardians” holiday movie, a co-production with British firm Aardman Animations. The studio laid off 350 people after announcing the write-down in February 2013.
In a conference call with analysts Tuesday, Katzenberg was candid about the poor results.
“Three of our last four films have not delivered in terms of audience turnout or financial performance,” he said.
Katzenberg cited several factors, including rising competition for family movies and the challenge of making and marketing movies to an increasingly global audience.
He said the studio was “evaluating our creative process” to ensure that movies have the broadest appeal and would be more selective on when and how many films it releases each year. Currently, DreamWorks releases about three movies a year.
“It is our No. 1 priority,” he said, “to make the necessary changes to get us back to the high standards that DreamWorks has set for itself.”
Ann Daly, DreamWorks’ chief operating officer, said the studio had taken steps to reduce the costs of making movies — future productions would cost $125 million, down from the $145 million it cost to make “Peabody.” She added that the company also was diversifying into new businesses, such as producing TV shows for Netflix, to reduce its reliance on animated movies.
The latest write-down was expected by analysts, some of whom had lowered their forecasts and downgraded their rating on the company’s stock.
This week Bank of America Merrill Lynch downgraded its rating to “underperform” from neutral and cut its estimates for DreamWorks Animation because of the weak performance of “Mr. Peabody & Sherman.”
However, analysts expect that the studio will bounce back with its upcoming “How to Train Your Dragon 2.” Sequels generally fare better at the box office than the original movies.
DreamWorks shares have fallen nearly 30% this year and closed Tuesday down 12 cents at $26.37.
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