In the entertainment industry, you must keep moving forward like a shark to survive. And no one knows that better than Jeffrey Katzenberg, who finally landed a buyer for his DreamWorks Animation in Philadelphia-based Comcast — aka the owner of Universal Pictures and animation house Illumination Studios. The media conglomerate has closed a deal buy his Glendale-based animation studio for $3.8 billion, far more than its current market value of $2.35 billion. Katzenberg controls 60.7% of DreamWorks’ voting shares.
Illumination is the jewel in Universal’s annual release slate, reliably turning out “Despicable Me” spin-offs and Dr. Seuss adaptations. Run by former Fox exec Chris Meledandri, Illumination can take full advantage of the DreamWorks library of brands and potential franchises.
The DreamWorks story is one of high-flown dreams and expectations, and a much smaller, more prosaic reality.
After Disney chief Michael Eisner exiled him from the Magic Kingdom, in 1994 Katzenberg convinced Steven Spielberg and David Geffen to found a new studio, DreamWorks SKG. Katzenberg considered himself to be the creative driver behind DreamWorks animation. He started haltingly with the underwhelming trifecta “Antz,” “Prince of Egypt,” and “El Dorado,” which hardly put DreamWorks in competition with Disney.
This TV-bolstered strategy made DreamWorks Animation a far more attractive property for a studio like Universal, which is not only in the animation business via Illumination but could also use new characters for its theme parks and consumer product pipelines. Katzenberg has also developed a strong presence in China with Beijing-based DreamWorks Oriental. In 2015, China co-production “Kung Fu Panda 3″ grossed $504 million worldwide, with some 70% of the total from international markets.
DreamWorks shares shot up dramatically on Wednesday after the news of the potential deal broke Tuesday night. The studio has been on the uptick, boasting its best numbers in a decade: DreamWorks reported earnings of $42.1 million (48 cents a share) in its most recent quarterly report vs. last year’s fourth quarter loss of $54.8 million (64 cents). Revenue rose to $319 million, up 36% from 2014.
Now Universal is home to all parts of DreamWorks again, as what’s left of Spielberg’s DreamWorks live-action empire is already there. And Katzenberg will be set free, like Geffen, a billionaire at last. But the old high-flying dream of a DreamWorks studio is long gone.
For a peek at upcoming work from Dreamworks Animation, check out the “Trolls” teaser trailer:
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