DreamWorks Animation SKG Inc. (DWA:US), the film studio run by Jeffrey Katzenberg, said second-quarter profit slid 63 percent, missing estimates as “Madagascar 3” fell short of last year’s feature. The stock declined.
Net income shrank to $12.8 million, or 15 cents a share, from $34.1 million, or 40 cents, a year earlier, Glendale, California-based DreamWorks Animation said today in a statement (DWA:US). Analysts projected 25 cents, the average of 11 estimates compiled by Bloomberg.
DreamWorks Animation releases two or three pictures a year. Its June 8 film, “Madagascar 3: Europe’s Most Wanted,” has generated $501 million worldwide, according to Box Office Mojo. The movie is still opening in foreign markets because of delays tied to the Olympics, Chief Executive Officer Katzenberg said on a conference call. The 2011 summer picture, “Kung Fu Panda 2,” had more than $600 million worldwide at this time last year.
“All of DreamWorks Animation’s sequels have surpassed $600 million at the worldwide box office and ‘Madagascar 3’ is on track to do the same,” Katzenberg said, adding the company sees “considerable runway left here on the film.”
DreamWorks Animation slid as much as 14 percent to $16.60 in extended trading. The stock was little changed at $19.20 at the close in New York and had gained (DWA:US) 16 percent this year.
Second-quarter revenue fell 25 percent to $162.8 million, missing analysts’ estimates (DWA:US) of $188.6 million.
The company expects to announce a film distribution agreement with a major Hollywood studio by the U.S. Labor Day holiday, according to Katzenberg. The studio has mostly abandoned plans to self-distribute when its current agreement with Viacom Inc. (VIAB:US)’s Paramount Pictures ends this year, he said.
Katzenberg, 61, also said Paramount has been accelerating payments “in a way they haven’t done up to now.”
The company is taking steps to diversify beyond movies and home entertainment, with efforts in television and live entertainment, foreign investment and technology.
Those include a wide-ranging venture in China, plans for an amusement park in New Jersey and the purchase this month of Classic Media, owner of rights to cartoon characters Casper the friendly ghost, Rocky the flying squirrel and his pal, Bullwinkle the Moose.
On the call, Katzenberg likened the Classic Media portfolio of characters to those of Marvel Comics 15 years ago and said the properties will help the company advance efforts to create a DreamWorks branded television channel.
“I think we put some booster jets on the company,” Katzenberg said.
He also said the company plans announcements in coming months on initiatives in casual games, social media and applications.
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