Quinnmac000
Well-Known Member
Straight from Universal Film Chief Jeffrey Shell,
http://www.hollywoodreporter.com/news/jeff-shell-talks-dreamworks-animation-888695
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Comcast in talks to buy Dreamworks Animation
- Thread starter IowaHawks7
- Start date
Straight from Universal Film Chief Jeffrey Shell,
http://www.hollywoodreporter.com/news/jeff-shell-talks-dreamworks-animation-888695
andysol
Well-Known Member
Yeah, yeah. But @CaptainAmerica can't name the characters in Madagascar, so it's a bad buy. How can Mr. Shell combat that logic?
Cesar R M
Well-Known Member
njDizFan
Well-Known Member
As stated previosly, they were willing to pony up 50 billion for the Time Warner aquisition. 3.8 Billion is money they found in the sofa cushions.
And not only does this give them a few more IPs, but instant credibility as the number 2 animation production company. It's such a huge market. families are clamoring for quality animated features.
Also noted, was the jump start into TV production that saves time and money in the long run.
Yeah no one knows who King Julien is yet he has is own Netflix show which has won awards, was the most quotable character in the first movie with " I like to move it, move it," but I forgot, he isn't Disney so he isn't relevant.
Also I like how we casually forget about the popularity of Kung Fu Panda, Toothless, Penguins of madagascar, and Hiccup.
Also I like how we casually forget about the popularity of Kung Fu Panda, Toothless, Penguins of madagascar, and Hiccup.
CaptainAmerica
Premium Member
If DreamWorks is worth $3.8 billion, then Bob Iger is the greatest M&A mind in the history of American capitalism.
Jimmy Thick
Well-Known Member
Nintendo, Sponge Bob, Scooby Doo and the recent Dreamworks purchase sounds like the makings of a fantastic third gate many, many years away.
lebeau
Well-Known Member
Although you really can't give him much credit for Star Wars or Pixar. Anyone who wasn't Michael Eisner was going to make the Pixar deal happen. And Lucas always intended to unload his company to Disney when he was done with it.
Marvel, I tip my hat to him on that one.
Cesar R M
Well-Known Member
You really seem to have some strange hateboner and blatant bias against Dreamworks.
CaptainAmerica
Premium Member
Okay, last time.
DreamWorks is fine. It's kewl. It's nifty and great. I just don't think it's worth $4 billion. That's all I'm saying.
If Disney had paid $20 billion for Lucas, I would have said the same thing.
maxairmike
Well-Known Member
So you think DreamWorks was overvalued by 5x, or that it was only worth $760 million? Wow, that's a ridiculously bold statement.
Of course, I know that wasn't your actual point, but I think it is a fair point to bring up. Maybe DreamWorks was closer to a $2b valuation. Okay. I think Universal paid the premium for a few things. First and foremost, getting Katzenberg out of the top spot was probably worth many millions in compensation straight up, let alone over several years. Secondly, the value of already in place systems and relationships that Universal plans to use that they were just beginning to develop. The statements above indicate that's an immediate return on and elimination of 5-7 years of work and extra costs, for multiple areas. That is huge. I seem to recall people thinking Disney may have overpaid for Marvel. Maybe not as much as you seem to think Comcast overpaid for DreamWorks, but I expect that the end results will be in the same vein as how Marvel has panned out for Disney. Heck, look at those BO numbers that were posted. Yeah, those are gross numbers, but based on that alone you get a pretty quick return and everything else is gravy.
lebeau
Well-Known Member
From what I read, Lucas pulled the trigger on the sale because he was worried about tax laws changing and becoming less favorable to him. So I think there were probably a lot of factors beyond his background with Iger at ABC.
http://www.bizjournals.com/sanfrancisco/blog/2012/10/disney-lucas-fiscal-cliff-taxes-medicare.html
This isn't the original article I read on the subject, but it came in as part of a Google search. There was a lot of talk at the time that tax laws prompted Lucas to sell. Here's some other articles that express similar points of view:
http://www.bna.com/taxes-thank-star-b57982064017/
https://www.rocketlawyer.com/blog/w...-business-succession-from-george-lucas-910933
lebeau
Well-Known Member
Why Did Comcast Buy DreamWorks Animation? Because It Can
The most powerful executive in Hollywood lives in Philadelphia, it seems. ComcastCEO Brian Roberts strengthened that case today by agreeing to pay $3.8 billion to add DreamWorks Animation to his NBCUniversal operation — which is attached to the nation’s largest collection of cable TV and broadband systems.
What does that mean for the companies? Comcast and DWA are still working out details after a whirlwind negotiation that became more urgent Tuesday night when word of the talks leaked. This morning the companies put out a simple press release without a conference call to brief Wall Street or extensive SEC filings providing financial details.
What is known: DWA’s animation operations will become part of Universal Filmed Entertainment Group while co-founder and CEO Jeffrey Katzenberg consults for NBCUniversal and becomes chairman of DreamWorks New Media — a potential spinoff candidate. He’s scheduled to talk with analysts on May 5, when DWA releases its Q1 earnings.
Here’s the apparent rationale for the deal, and state of play for the newly engaged companies:
Q: Why does Comcast want DWA?
A: Executives say that DWA will help NBCUniversal’s film animation and consumer products businesses, develop characters for theme park attractions, and provide TV shows for kids.
Q: That’s it?
A: DWA is cheap.
Q: Cheap? Analysts say that Comcast’s paying a high price for DWA.
A: This depends on your perspective. True, the $41-a-share offer is 51% higher than DWA sold for before news about the talks leaked. But the studio’s shares were beaten up in the beginning of 2014, and have been stuck in neutral since then.
Q: Still, $4.1 billion is a lot of money.
A: Comcast can buy DWA without breaking a sweat. It has a market value of nearly $150 billion, making it 36.5 times bigger than DWA. The cable giant says the deal won’t interfere with its vow to spend $5 billion this year repurchasing shares. It apparently didn’t hire an investment bank to help with the deal. And its investors don’t seem to care: Comcast shares are up less than 1% since Tuesday.
Q: Will Comcast be able to find any savings or synergies at DWA?
A: The company apparently believes it can. Comcast says the purchase price represents a “high single digit operating cash flow multiple.” Wells Fargo Securities’ Marci Ryvicker did the math and says that translates to $300 million a year in savings or synergies. PiperJaffray’s Stan Meyers sees $250 million including $50 million from higher film splits with theaters, $50 million in distribution fees, $50 million from film budget expenses, and $100 million in overhead.
Q: Why was DWA beaten up?
A: DWA lost money on four of the 10 films it released prior to January. It recorded write-downs for Rise Of The Guardians, Turbo, Mr. Peabody And Sherman, and Penguins Of Madagascar. Katzenberg cut costs — including 500 layoffs — and diversified into other businesses, especially television and new media.
Q: How did its prospects look before it made the deal with Comcast?
A: Cloudy. DWA still makes most of its money from feature films, and some analysts recently lowered their earnings estimates. International sales for Kung Fu Panda 3, released in January, are coming in below Wall Street expectations. DWA won’t have another chance to impress investors until November, when it releases Trolls. That’s a lot of pressure to put on one film — especially one that opens the same weekend as Marvel’s Doctor Strange and two weeks before Warner Bros.’ Fantastic Beasts And Where To Find Them.
Q: Did Katzenberg panic?
A: He has been trying to make a deal for years, and had serious talks that didn’t pan out with Hasbro and SoftBank. But the threats to his stock price might have added some urgency to his conversations with Comcast. The deal came together quickly: Early this month DWA agreed to sell a 24.5% stake in AwesomenessTV, which it controls, to Verizon. That likely wouldn’t have happened if the studio believed it was about to be bought by Comcast.
Q: Does the deal with Comcast face any obstacles?
A: Probably not. Katzenberg controls 60% of DWA’s voting shares.
Q: How about federal antitrust regulators?
A: Either the Justice Department or FTC could sue to block the acquisition. DOJ opposed Comcast last year when it wanted to pay $45 billion for Time Warner Cable. But it’s hard to imagine that regulators would oppose Comcast’s acquisition of DWA to compete with Disney which has its own animation studio, Pixar, Marvel, and Lucasfilm. If the feds reject Comcast’s deal with DWA, then the cable power will have to pay a $200 million breakup fee.
Q: Isn’t the SEC investigating DWA for its Turbo write-down?
A: Yes. DWA says it’s cooperating, but can’t estimate how long the investigation will last, or how it might pan out.
Q: DWA has deals that might conflict with Comcast’s interests.
A: Right, although they don’t appear to be too troublesome. DWA’s film and home video distribution deal with Fox, signed in 2012, includes a provision allowing it to terminate if there’s a change in control. In January, DWA expanded its multi-year agreement allowing Netflix to offer its films in the premium TV window and providing the streaming service with original kids’ programming. There’s also Verizon’s involvement with AwesomenessTV.
Q: What exactly is Comcast buying?
A: DWA consists of five units: Feature Films accounted for about 57% of DWA’s nearly $916 million in revenues last year. Television Series and Specials contributed 25%. Consumer Products kicked in a little more than 9%. A New Media unit, which is primarily DWA’s 50.5% interest in AwesomenessTV, offered 8%. And an Other segment that includes its live performances and licensing of its software tools was less than 1%.
Q: What about Oriental DreamWorks?
A: DWA agreed in 2013 to pay $50 million for 45.5% of Oriental DreamWorks, a joint venture with China Media Capital Center, Shanghai Media Group, and Shanghai Alliance Investment. It’s designed to create content that will appeal to Chinese audiences, and is run by its own board of directors. DWA has paid $17 million of the amount it owes with the rest due by the end of 2017.
Q: Anything else at the company?
A: DWA ended last year with 2,300 employees. Most work at its Glendale, CA campus, which consists of 10 buildings on about 14.7 acres. Last year DWA sold it for $185 million, with a 20-year lease-back agreement. The studio pays $13.2 million a year, increasing 1.5% per year.
Q: Does DWA have much debt?
A: Yes. It owed $360 million at the end of 2015. That includes $300 million in Senior Notes due in 2020 on which it’s paying 6.875% a year in interest. Moody’s considers it speculative, meaning it’s too risky for many pension funds and banks to buy.
Q: Is DWA profitable?
A: Not consistently. It lost $54.8 million last year and $309.6 million in 2014, but made $55.1 million in 2013.
The most powerful executive in Hollywood lives in Philadelphia, it seems. ComcastCEO Brian Roberts strengthened that case today by agreeing to pay $3.8 billion to add DreamWorks Animation to his NBCUniversal operation — which is attached to the nation’s largest collection of cable TV and broadband systems.
What does that mean for the companies? Comcast and DWA are still working out details after a whirlwind negotiation that became more urgent Tuesday night when word of the talks leaked. This morning the companies put out a simple press release without a conference call to brief Wall Street or extensive SEC filings providing financial details.
What is known: DWA’s animation operations will become part of Universal Filmed Entertainment Group while co-founder and CEO Jeffrey Katzenberg consults for NBCUniversal and becomes chairman of DreamWorks New Media — a potential spinoff candidate. He’s scheduled to talk with analysts on May 5, when DWA releases its Q1 earnings.
Here’s the apparent rationale for the deal, and state of play for the newly engaged companies:
Q: Why does Comcast want DWA?
A: Executives say that DWA will help NBCUniversal’s film animation and consumer products businesses, develop characters for theme park attractions, and provide TV shows for kids.
Q: That’s it?
A: DWA is cheap.
Q: Cheap? Analysts say that Comcast’s paying a high price for DWA.
A: This depends on your perspective. True, the $41-a-share offer is 51% higher than DWA sold for before news about the talks leaked. But the studio’s shares were beaten up in the beginning of 2014, and have been stuck in neutral since then.
Q: Still, $4.1 billion is a lot of money.
A: Comcast can buy DWA without breaking a sweat. It has a market value of nearly $150 billion, making it 36.5 times bigger than DWA. The cable giant says the deal won’t interfere with its vow to spend $5 billion this year repurchasing shares. It apparently didn’t hire an investment bank to help with the deal. And its investors don’t seem to care: Comcast shares are up less than 1% since Tuesday.
Q: Will Comcast be able to find any savings or synergies at DWA?
A: The company apparently believes it can. Comcast says the purchase price represents a “high single digit operating cash flow multiple.” Wells Fargo Securities’ Marci Ryvicker did the math and says that translates to $300 million a year in savings or synergies. PiperJaffray’s Stan Meyers sees $250 million including $50 million from higher film splits with theaters, $50 million in distribution fees, $50 million from film budget expenses, and $100 million in overhead.
Q: Why was DWA beaten up?
A: DWA lost money on four of the 10 films it released prior to January. It recorded write-downs for Rise Of The Guardians, Turbo, Mr. Peabody And Sherman, and Penguins Of Madagascar. Katzenberg cut costs — including 500 layoffs — and diversified into other businesses, especially television and new media.
Q: How did its prospects look before it made the deal with Comcast?
A: Cloudy. DWA still makes most of its money from feature films, and some analysts recently lowered their earnings estimates. International sales for Kung Fu Panda 3, released in January, are coming in below Wall Street expectations. DWA won’t have another chance to impress investors until November, when it releases Trolls. That’s a lot of pressure to put on one film — especially one that opens the same weekend as Marvel’s Doctor Strange and two weeks before Warner Bros.’ Fantastic Beasts And Where To Find Them.
Q: Did Katzenberg panic?
A: He has been trying to make a deal for years, and had serious talks that didn’t pan out with Hasbro and SoftBank. But the threats to his stock price might have added some urgency to his conversations with Comcast. The deal came together quickly: Early this month DWA agreed to sell a 24.5% stake in AwesomenessTV, which it controls, to Verizon. That likely wouldn’t have happened if the studio believed it was about to be bought by Comcast.
Q: Does the deal with Comcast face any obstacles?
A: Probably not. Katzenberg controls 60% of DWA’s voting shares.
Q: How about federal antitrust regulators?
A: Either the Justice Department or FTC could sue to block the acquisition. DOJ opposed Comcast last year when it wanted to pay $45 billion for Time Warner Cable. But it’s hard to imagine that regulators would oppose Comcast’s acquisition of DWA to compete with Disney which has its own animation studio, Pixar, Marvel, and Lucasfilm. If the feds reject Comcast’s deal with DWA, then the cable power will have to pay a $200 million breakup fee.
Q: Isn’t the SEC investigating DWA for its Turbo write-down?
A: Yes. DWA says it’s cooperating, but can’t estimate how long the investigation will last, or how it might pan out.
Q: DWA has deals that might conflict with Comcast’s interests.
A: Right, although they don’t appear to be too troublesome. DWA’s film and home video distribution deal with Fox, signed in 2012, includes a provision allowing it to terminate if there’s a change in control. In January, DWA expanded its multi-year agreement allowing Netflix to offer its films in the premium TV window and providing the streaming service with original kids’ programming. There’s also Verizon’s involvement with AwesomenessTV.
Q: What exactly is Comcast buying?
A: DWA consists of five units: Feature Films accounted for about 57% of DWA’s nearly $916 million in revenues last year. Television Series and Specials contributed 25%. Consumer Products kicked in a little more than 9%. A New Media unit, which is primarily DWA’s 50.5% interest in AwesomenessTV, offered 8%. And an Other segment that includes its live performances and licensing of its software tools was less than 1%.
Q: What about Oriental DreamWorks?
A: DWA agreed in 2013 to pay $50 million for 45.5% of Oriental DreamWorks, a joint venture with China Media Capital Center, Shanghai Media Group, and Shanghai Alliance Investment. It’s designed to create content that will appeal to Chinese audiences, and is run by its own board of directors. DWA has paid $17 million of the amount it owes with the rest due by the end of 2017.
Q: Anything else at the company?
A: DWA ended last year with 2,300 employees. Most work at its Glendale, CA campus, which consists of 10 buildings on about 14.7 acres. Last year DWA sold it for $185 million, with a 20-year lease-back agreement. The studio pays $13.2 million a year, increasing 1.5% per year.
Q: Does DWA have much debt?
A: Yes. It owed $360 million at the end of 2015. That includes $300 million in Senior Notes due in 2020 on which it’s paying 6.875% a year in interest. Moody’s considers it speculative, meaning it’s too risky for many pension funds and banks to buy.
Q: Is DWA profitable?
A: Not consistently. It lost $54.8 million last year and $309.6 million in 2014, but made $55.1 million in 2013.
Well that's easy when most of the films in your studio's short history have made gaggles of money, even before you take into account their relatively small budgets. DreamWorks has had a lot more time to bomb (and to put their hands in some questionable cookie jars.)
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BubbaQuest
Well-Known Member
If Ruldolph and all of the clay animation cartoons from my childhood are turned into something for Xmas this year at Universal, without a doubt I will change my reservations to make sure I can catch it. Bank on it.
Agreed!!
I thought Uni already did a great job with their Xmas displays and the Macys balloon parade. But I'm not a huge fan of Grinch. If they can switch their main holiday character from Grinch to these guys, I see an annual holiday trip to Uni in my near future. Sorry Jack Skellington.
Californian Elitist
Well-Known Member
Count me in as another who believes How to Train Your Dragon 2 was robbed of that Best Animated Picture Oscar. I feel the Academy always gives the award to Disney by default, which is BS.
Anyways, this is exciting. Dreamworks has great material. I'm looking forward to what Universal cooks up.
Oh yeah, I like Antz more than A Bug's Life. Yep.
Anyways, this is exciting. Dreamworks has great material. I'm looking forward to what Universal cooks up.
Oh yeah, I like Antz more than A Bug's Life. Yep.
Cesar R M
Well-Known Member
I still wonder if the problems with Dreamworks has to do with its leaderships than actually the content they release.
I remember reading many websites claiming the leadership was absolutely dismal and wasteful.
Quinnmac000
Well-Known Member
Dream works conference call is today. Should get more information
champdisney
Well-Known Member
Despite what others may think, I believe Universal will benefit with this one. Should be cool to see how this purchase evolves in time. I really liked the last two films I saw not so long ago: The Croods and Mr. Peabody and Sherman. They're also working on a Rocky and Bullwinkle film that I'm excited for.