Bloomberg News

Netflix Rises on Push Into Kids’ TV Shows With DreamWorks

June 17, 2013

Netflix Deal With DreamWorks Gains Programming to Fight Amazon

The deal for Netflix Inc. covers more than 300 hours of new programming, including shows inspired by characters from DreamWorks Animation SKG Inc.'s franchises, new feature films and its Classic Media library. Photographer: Scott Eells/Bloomberg

Netflix Inc. (NFLX:US), the biggest online subscription-video service, rose the most in almost two months after agreeing to buy shows from DreamWorks Animation SKG Inc. (DWA:US), furthering a push into original children’s programming.

Netflix surged 7.1 percent to $229.23 at the close in New York, the most since April 23, for a year-to-date advance of 148 percent. Both the daily and 2013 marks are the best in the Standard & Poor’s 500 Index. Jeffrey Katzenberg’s DreamWorks Animation rose 4.1 percent to $23.74, the most since May 1.

Netflix Chief Executive Officer Reed Hastings is betting on children’s programming and original series to cement the company’s place as undisputed leader of online programming, while fending off Amazon.com Inc. (AMZN:US), the largest online retailer, Hulu LLC and other rivals. The deal gives him more exclusive content while providing DreamWorks Animation with an alternative to selling its shows to a cable-television network.

“Netflix is starting to get to a degree where content companies are considering them a viable distribution partner” for new programs, said Brian Fitzgerald, an analyst at Jefferies Group LLC. Studios are “coming to Netflix for deals instead of vice versa,” he said.

The agreement is Los Gatos, California-based Netflix’s biggest commitment yet to original programs, according to a statement today that didn’t include terms.

Joris Evers, a spokesman for Netflix, declined to comment beyond the release.

Exclusive Shows

Netflix will receive more than 300 hours of new programming, including shows inspired by characters from DreamWorks Animation’s movies, new feature films and its library of classic shows, such as “Casper the Friendly Ghost” and “The Lone Ranger.”

Netflix gains exclusive rights to the content everywhere it operates, including Canada, the U.S., Latin America, the U.K. and Nordic countries, the company said in a statement.

Chief Content Officer Ted Sarandos is expanding original programming such as Kevin Spacey’s “House of Cards,” while signing exclusive deals with other content providers to deliver shows subscribers can’t get elsewhere on TV or online. Netflix paid about $100 million for two seasons of “House of Cards,” Deadline.com reported previously.

This year, Netflix let expire its pact with Viacom Inc. (VIAB:US) for kids’ shows like “Dora the Explorer” and “SpongeBob SquarePants.” On June 4, Amazon picked up the shows on a non-exclusive basis.

Film Inspired

The agreement deepens ties between Netflix and Glendale, California-based DreamWorks Animation. In February, the companies teamed up to create “Turbo: F.A.S.T.,” a television series created for Netflix based on the upcoming DreamWorks Animation film “Turbo.” Netflix also signed an agreement with DreamWorks Animation in 2011 that gave it exclusive distribution rights for first-run feature films.

Katzenberg has taken steps to lessen the maker of “Shrek” and “Madagascar” movies’ dependence on scoring hits with each of theatrical release.

The company has considered creating its own cartoon cable network and is focusing for now on Netflix’s growing subscriber base to deliver cash and brand recognition for its properties. DreamWorks Animation is separately developing entertainment districts and theme parks in China and Russia through joint ventures and licensing agreements.

The agreement doesn’t cover all DreamWorks Animation characters or preclude other television deals, spokeswoman Allison Rawlings said. Netflix gets exclusive access to specific programs in territories where it operates, she said by telephone.

“Right now, this is our primary focus,” Rawlings said.

DreamWorks Animation now sells a series based on the film “How to Train Your Dragon” to Time Warner Inc.’s Cartoon Network and has two series on Nickelodeon.

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net; Madeline McMahon in New York at mmcmahon26@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net; David Risser at drisser@bloomberg.net; Nick Turner at nturner7@bloomberg.net


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Companies Mentioned

  • NFLX
    (Netflix Inc)
    • $425.38 USD
    • -2.52
    • -0.59%
  • DWA
    (DreamWorks Animation SKG Inc)
    • $22.78 USD
    • 0.22
    • 0.97%
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