Bloomberg News

DreamWorks CEO Calls Netflix ‘Patron Saint’ to Animation Studio

October 09, 2013

DreamWorks Animation SKG Inc. (DWA:US) sees its agreement to provide original content to Netflix Inc. (NFLX:US) as redefining the company behind the lovable green ogre “Shrek” and crime-fighting “Kung Fu Panda.”

DreamWorks Animation is the first studio to provide original family content to the streaming service -- 300 hours of it -- in a move that makes Netflix “our patron saint,” according to Chief Executive Officer Jeffrey Katzenberg.

“There’s not a minute of the day that I don’t think about how we can exceed their expectations,” the 62-year-old said in an interview yesterday in Cannes, France, during Mipcom, the annual television fair. “That’s our job as the supplier.”

The Netflix accord, signed in June, and another to supply Europe’s biggest broadcaster, RTL Group SA, with content illustrate a shift by DreamWorks Animation -- founded 19 years ago by Steven Spielberg, David Geffen and Katzenberg -- and the film world in general toward the small screen.

Film stars, producers and funders are increasingly drawn to television, as demand for content surges to feed multiplying numbers of channels and viewing platforms. TV viewership is expanding with more people watching shows from Netflix, Hulu LLC and other services on computer screens, tablets and smartphones.

“We reached a threshold a few years ago, that the cornerstone foundation of the company -- the movie business -- was in extremely good shape,” Katzenberg said. “The place most obvious to expand was the TV side of the business.”

‘Breaking Bad’

Katzenberg, who previously worked at the Walt Disney Co., is seeking to cut the company’s dependence on films and double TV production revenue to more than $200 million annually by 2015, he said. In addition to Netflix, he is exploring other online viewing platforms. In May, it added a teen network on Google Inc.’s YouTube called AwesomenessTV for $33 million.

Katzenberg offered the creators of AMC Networks Inc. (AMCX:US)’s hit “Breaking Bad” $75 million for an extra 180 minutes of the show, he said in a speech at Mipcom. His plan was to offer six-minute installments over 30 days via an Internet subscription, for between 50 cents and 99 cents per episode. His point was to prove viewers will pay for high quality even in shorter forms.

When Katzenberg saw how the series ended on Sept. 29, he realized the extra episodes weren’t possible, he said.

Shares of the Glendale, California-based company fell 3.4 percent to $27.05 yesterday in New York. The shares (DWA:US) have gained 63 percent this year.

DreamWorks Animation plans to lower film budgets to an average of $120 million each, from $150 million, through new software that will be “fully deployed” for theatrical features made from the fourth quarter of 2014, he said.

The company will continue to make acquisitions (DWA:US) as opportunities arise, Katzenberg said, while declining to cite specific interests. DreamWorks Animation bought Classic Media, owner of Casper and Lassie, for $155 million in 2012.

“We have a clean balance sheet and lots of capacity,” he said. “If there’s something that’s good business for us, we’ll pursue it.”

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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Companies Mentioned

  • DWA
    (DreamWorks Animation SKG Inc)
    • $21.36 USD
    • 1.08
    • 5.06%
  • NFLX
    (Netflix Inc)
    • $357.09 USD
    • -4.61
    • -1.29%
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