Dreamworks

[rag10576]

Dreamworks is laying off 350 employees. Will Disney make a bid to purchase them? Things arent looking good for Dreamworks.

 

[Horace Horsecollar]

Dreamworks is laying off 350 employees. Will Disney make a bid to purchase them? Things arent looking good for Dreamworks.

First, I don't think it's correct to say, "Things aren't looking good for DreamWorks."

This news is about DreamWorks Animation (aka DreamWorks Animation SKG), not about DreamWorks (aka DreamWorks SKG). DreamWorks Animation was spun off from DreamWorks as a separate company almost a decade ago.

DreamWorks movies are distributed through Disney under Disney's Touchstone brand.

DreamWorks Animation movies are not distributed through Disney. DreamWorks Animation has a long history of success -- notably the Shrek, Kung Fu Panda, and Madagascar series -- although there have also been a number of duds over the years ago. DreamWorks Animation just reported a $82.7 million loss for the 4th quarter 2012 and layoffs of 350 people to reduce the company's cost structure. But that doesn't mean the company is in trouble.

It's not as if Disney could buy DreamWorks Animation SKG and its roster of characters for a pittance. The company currently has a market cap $1.36 billion, and an unsolicited bid from Disney would probably require a substantial premium over that market cap.

As a fan of animation, I want Disney to have competitors who also make good animated features. I wouldn't want the same executives to control Disney, Pixar, and DreamWorks Animation.

There would not seem to be much to gain from Disney buying DreamWorks Animation -- not for Disney, not for DreamWorks Animation, and not for moviegoers.

 

[NYUBwayBaby]

They are laying off 15% of their staff. It's a big number, but it doesn't mean that Dreamworks Animation is in trouble. A bad year means cuts, but their upcoming slate isn't too bad. This year has "The Croods" and "Turbo," both of which could go either way, although there is a "Turbo" TV series in development with Netflix, so they are optimistic about that. 2014 has "How to Train Your Dragon 2" which will probably do VERY well, along with two other films. 2015 has a "Madagascar" spin off with the penguins and three other films. 2016 has "Kung Fu 3" and " Dragon 3", so that will likely be a great year for the studio. Plus there are numerous films in development without a release date ("Puss in Boots 2" "Captain Underpants"). So, in the long run, they'll probably be fine.

 

[rag10576]

But it wouldnt be a bad deal if Disney made an offer to them. After all Disney has helped with distribution rights to there films in the past.

 

[Horace Horsecollar]

But it wouldnt be a bad deal if Disney made an offer to them. After all Disney has helped with distribution rights to there films in the past.

Disney has never been involved with the distribution of movies from Dreamworks Animation.

Now Dreamworks Animation has a new marketing and distribution deal Twentieth Century Fox -- from 2013 through 2017. DreamWorks Animation has done a good job licensing their IP for theme park and cruise line use.

What would Disney gain from owning DreamWorks Animation? And what would DreamWorks Animation gain by giving up its independence?

For any merger to make sense, the combined company must see a business advantage compared to remaining separate. It's easy to make a case that Disney and Pixar are better off together than as separate companies. I don't see how such a case can be made for Disney and DreamWorks Animation.

If The Walt Disney Company wants to increase its production of animated features, the company can simply fund projects at Walt Disney Animation Studios and/or Pixar Animation Studios.

There is no need to take on the baggage and overhead of another company -- especially a company that has its IP committed to various partners, including Twentieth Century Fox (marketing and distribution), SeaWorld Parks & Entertainment (DreamWorks' Madagascar), Universal Parks (DreamWorks' Shrek), and big theme park deals in Europe.

 

[rag10576]

What better than to get to see the (books) of your competitors?

 

[NYUBwayBaby]

As Horace Horsecollar said, Disney distributes Dreamworks, NOT Dreamworks Animation. They are two different companies. It makes no sense, business-wise, to try to take over Dreamworks Animation. And I don't think they have any intent on allowing themselves to be bought up by Disney.
Heck, the co-founder and current CEO Jeffrey Katzenberg used to work for Disney and left on less than good terms. Granted, most of that had to do with Eisner, but I don't necessarily think he'd want his animation company to be bought out by Disney.

 

[rag10576]

He may not have a choice if the upcoming movies are not a hit and profitable.

 

[Horace Horsecollar]

What better than to get to see the (books) of your competitors?

Making an offer to to acquire a company does not provide automatic access to the company's books. It's not a way to force a competitor to share accounting minutia.

Besides, Dreams Animation SKG is a public company, and the numbers that really matter are reported to the SEC. They're available to anyone with a web browser and an internet connection.

Movie box office numbers are also reported.

He may not have a choice if the upcoming movies are not a hit and profitable.

If Dreamworks Animation SKG has a string of duds, Disney will have even less reason to be interested in acquiring it.

 

[doconeill]

He may not have a choice if the upcoming movies are not a hit and profitable.

It seems DASKG has bet the whole company on "The Croods" at this point.

If Dreamworks Animation SKG has a string of duds, Disney will have even less reason to be interested in acquiring it.

Unless they wanted some of the properties they already own...I'm sure Universal would LOVE to pay Disney more royalties for having Shrek in the parks

 

[rag10576]

I hope they plan on heavy promotion. Never even heard of The Croods?

 

[Horace Horsecollar]

I hope they plan on heavy promotion. Never even heard of The Croods?

Opening March 22: http://www.thecroodsmovie.com/

 

[NYUBwayBaby]

Honestly, it's the only kid friendly movie opening up in, like, a month. I mean, Oz is family friendly, but I think it may be too scary for small kids. "Escape from Planet Earth" is out now, and even though I saw no advertising for it the 2D shows have been quite busy at the theater I manage. I see ads for the Croods quite often.

 

[rag10576]

Just saw the preview for the Croods. Looks like a Flop.

 

[SpacePlace]

Honestly, it's the only kid friendly movie opening up in, like, a month. I mean, Oz is family friendly, but I think it may be too scary for small kids. "Escape from Planet Earth" is out now, and even though I saw no advertising for it the 2D shows have been quite busy at the theater I manage. I see ads for the Croods quite often.

Agreed, my DD does not want to see OZ and she would probably freak out if I took her. She saw Escape from Planet Earth and seemed to like it enough. But she has seen the Crood trailer and acts out the characters and is super excited to see it when it comes out.

Kung Fu Panda 3 is also coming out soon but as for the 350 people that got fired, it's probably all the people that developed Rise of the Guardians. That was terrible! I couldn't believe that was a concept for a movie when I saw the trailer. I took DD to it and she was so bored she asked to leave half way through the movie, and she's never done that!

 

[SpacePlace]

I just read this on wikipedia for the page on Rise of The Guardians and it points to the bombing of RotG as the reason for the layoff.

As of February 24, 2013, Rise of the Guardians has grossed $102,017,123 in North America, and $200,300,000 in other countries, for a worldwide total of $302,317,123.[5]

In North America, the film opened to $32.3 million over its extended five-day weekend, and with $23.8 million over the three-day weekend, it reached fourth place behind The Twilight Saga: Breaking Dawn – Part 2, Skyfall, and Lincoln. The film's opening was the lowest debut for a DreamWorks Animation film since Flushed Away.[40] While the film did gross more than its $145 million budget, it still did not turn a profit for DreamWorks Animation due to its high production and marketing costs, forcing the studio to take an $83 million write-down.[47] This marks the first time the studio lost money on an animated film since Sinbad: Legend of the Seven Seas.[47][48] As a result, in February of 2013 the studio announced it was laying off 350 employees as part of a company-wide restructuring.[48]

 

[doconeill]

I just read this on wikipedia for the page on Rise of The Guardians and it points to the bombing of RotG as the reason for the layoff.

As of February 24, 2013, Rise of the Guardians has grossed $102,017,123 in North America, and $200,300,000 in other countries, for a worldwide total of $302,317,123.[5]

In North America, the film opened to $32.3 million over its extended five-day weekend, and with $23.8 million over the three-day weekend, it reached fourth place behind The Twilight Saga: Breaking Dawn – Part 2, Skyfall, and Lincoln. The film's opening was the lowest debut for a DreamWorks Animation film since Flushed Away.[40] While the film did gross more than its $145 million budget, it still did not turn a profit for DreamWorks Animation due to its high production and marketing costs, forcing the studio to take an $83 million write-down.[47] This marks the first time the studio lost money on an animated film since Sinbad: Legend of the Seven Seas.[47][48] As a result, in February of 2013 the studio announced it was laying off 350 employees as part of a company-wide restructuring.[48]

Yes, ROTG is a big a reason for the layoffs. But the layoffs also necessitated chopping their planned slate of movies as well. KFP3 isn't for another three years. They are taking stuff off the immediate production slate, putting them back into production or into turnaround ('wood-speak for "Someone wanna buy it off us?"), pushing other things back.

After "The Croods", DASKG's next film is "Turbo", 4 months later, and then nothing until March 2014 ("Mr. Peabody and Sherman" has been pushed back 5 months). If The Croods tanks, investors are not going to look kindly on the company.

DASKG simply hasn't been able to produce a movie for less than $130 million, while some of the smaller competitors are doing it cheaper and getting better results, like with Despicable Me.

 

[rag10576]

Thats why Disney is smart. If its a smart decision to own these properties and get paid by their competitors for theme park rights, Disney can hold them to a high level and get high profit . Its a win win situation.

 

[dtauer]

As Horace Horsecollar said, Disney distributes Dreamworks, NOT Dreamworks Animation. They are two different companies. It makes no sense, business-wise, to try to take over Dreamworks Animation. And I don't think they have any intent on allowing themselves to be bought up by Disney.
Heck, the co-founder and current CEO Jeffrey Katzenberg used to work for Disney and left on less than good terms. Granted, most of that had to do with Eisner, but I don't necessarily think he'd want his animation company to be bought out by Disney.

Yes, that would be quite a turn of events if Katzenberg returned to Disney via a company purchase. I think "less than good terms" is even an understatement as Katzenberg sued Disney after Frank Wells died and Katzenberg was not promoted. I read that the relationship was so strained that David Geffen actually worked on the settlement with Disney as Katzenberg would not deal with the company.

However, time does heal, and Katzenberg was somewhat a hero to Disney animation before he left. He revitalized Disney animation with The Little Mermaid, Beauty and the Beast, Aladdin and Lion King. Disney animation had some films in the works when he left, but then we hit a spell with the animation studio releasing titles such as Chicken Little and Home on the Range. They had a few decent movies during that time, but the successful movies at that time were coming from Pixar, which wasn't owned by Disney yet.

In Dreamworks Animation SKG, the SKG is Spielberg, Katzenberg and Geffen, obviously all successful in various types of media, especially film making. I guess I agree with a previous poster that if Disney already bought Pixar and Marvel, the addition of DASKG would put many of the most powerful people in the industry all at one company and diminish much of the healthy competition.

It would be very interesting, but probably not very realistic or practical. A lot of very strong personalities, even though they are all very talented, seems a recipe for disaster.