Comcast pays $3.8B for DreamWorks Animation studio
Deal bolsters children’s lineup in theatres and adds online assets for parent of Universal Pictures
NEW YORK— Comcast Corp., the parent of Universal Pictures, has agreed to buy DreamWorks Animation SKG Inc. in a deal valued at $3.8 billion (U.S.), building on the studio’s film and TV franchises by adding characters such as Shrek as well as a U.S.-based production house.
Comcast will pay $41 a share in cash for the animation studio, according to a statement Thursday. DreamWorks Animation co-founder and chief executive officer Jeffrey Katzenberg will mostly step aside, remaining a consultant to Comcast’s NBCUniversal division and becoming chairman of DreamWorks New Media, which includes the company’s ownership interests in AwesomenessTV and Nova.
Chris Meledandri, founder of Universal Pictures’ Illumination Entertainment, will run the combined animation business, Comcast said.
Buying the maker of the Shrek and Kung Fu Panda films will bolster Comcast’s children’s lineup in theatres and add online assets like AwesomenessTV, which targets millennials on YouTube.
For Katzenberg, who has tried to sell DreamWorks Animation before, the deal ends more than a year of speculation about its future and would finally shelter the company from stock-market volatility linked to whether the few movies it releases a year are hits or misses.
Comcast would make an ideal parent for DreamWorks Animation, especially with its ownership of Illumination, maker of hit films Minions and Despicable Me, said Neil Campling, a media analyst at Aviate Global in London. He rates Illumination as the No. 3 animation studio behind Disney and Pixar.
DreamWorks shares were halted in New York on the announcement of the deal. Comcast fell less than 1 per cent to $60.93 early in the day.
DreamWorks, based in Glendale, Calif., underwent a deep restructuring last year that reduced its workforce by 18 per cent and cut the number of films it made after a series of flops. Katzenberg said he would refocus on trying to make its animations profitable.
Unlike DreamWorks Animation, Illumination’s animators are largely based in Paris. With the acquisition, Universal gains a fully fledged U.S.-based movie and TV producer and distributor.
Katzenberg, 65, has been expanding the television business at DreamWorks Animation, selling films and cartoon series such as The Adventures of Puss in Boots to Netflix as he seeks to break a dependence on the box office. That growing television business may also be part of the appeal for Comcast.
If Katzenberg chose to leave after the deal, he’d be able to collect about $25.8 million in severance, benefits and equity awards that would vest early, based on Wednesday’s closing share price.
Comcast would pay DreamWorks a fee of $200 million if the deal is blocked by regulators, according to a filing. DreamWorks Animation would also provide a source of content for Universal’s growing theme park business. Universal already features Shrek rides at its parks in Florida, California, Japan and Singapore. The company is building a theme park in China, where Kung Fu Panda has been a big hit.