DreamWorks Animation widens loss in the first quarter
DreamWorks Animation SKG Inc. losses widened in the first quarter amid layoffs and other restructuring charges, but the Glendale studio’s prospects have brightened considerably with the success of its latest movie, “Home.”
That was the message Chief Executive Jeffrey Katzenberg delivered to Wall Street on Thursday.
During a conference call with analysts, Katzenberg singled out the movie’s recent box-office success as evidence of a turnaround at the studio, which has struggled with write-downs from such movies as “Mr. Peabody and Sherman” and “Turbo.”
“Home” has done better than many analysts expected, generating $308 million in ticket sales since its March 27 debut. The sci-fi comedy starring Steve Martin, Jennifer Lopez and Rihanna had the highest box office opening for an original DreamWorks film in six years.
“While 2015 is a transitional year for us, the worldwide box-office performance of ‘Home’ serves as early evidence that the changes we’re making in the core feature animation business are working,” Katzenberg said.
Katzenberg installed a new management team over features led by Bonnie Arnold and Mireille Soria, scaled back production and vowed to refocus his energies on the core feature film business, a departure from a strategy that focused on diversifying the studio’s operations.
The DreamWorks leader also credited a savvy marketing campaign for “Home” led by Fox and gave a shout out to Lopez, who sang a song from the movie, “Feel the Light,” on “America Idol” that garnered more than 45 million views.
The studio reported a net loss of $54.8 million, or 64 cents a share, during the three months that ended March 31, compared with a loss of $42.9 million, or 51 cents, during the same quarter last year.
Analysts polled by Thomson Reuters had estimated a loss of 45 cents a share in the quarter.
The loss included nearly $32 million in restructuring-related charges. DreamWorks announced in January that it was shedding 500 jobs — the largest cut in the studio’s 20-year history — after a string of box-office misfires.
The company also cited costs associated with the closing of its Redwood City, Calif., facility and changes related to its feature film slate.
DreamWorks Animation, however, had some positive news. Revenue climbed to $166.5 million, up 13% from last year’s first quarter. That was slightly better than the $164.5 million that analysts had forecast.
Last year’s hit film, “How to Train Your Dragon 2,” contributed $41.4 million in the quarter, mainly from pay television and home entertainment.
“In addition, last Friday our television series ‘All Hail King Julien’ won the Emmy Award for outstanding children’s animated program,” Katzenberg added. “This recognition highlights the extraordinary talent and high quality of their work being done at the studio today and we couldn’t be prouder.”
DreamWorks shares, which have climbed nearly 40% in the last three months, closed down 61 cents, or 2.3%, to $26.06 on Thursday. Shares dropped 5% in after-hours trading.
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