"Shrek The Third" (Belatedly) Gives DreamWorks A Boost
CNBC Media and Entertainment Reporter
Nothing like a green ogre to give a company's net income a boost. In its earnings report after the bell Tuesday, DreamWorks Animation reported quarterly net income of 98 cents a share, beating analysts consensus expectations of 72 cents a share, and up from a 20 cents per share loss in the year-ago quarter.
What does this have to do with "Shrek the Third" if the movie came out last summer and was out of theaters long before the quarter started? Well the revenue stream for these digitally animated movies takes a long while to come in. The $180 millionin revenue the ogre brought the company this past quarter came from international box office revenues and its DVD release.
DWA is one of the smaller media companies, but an advantage is that its revenue stream is quite predictable. It takes about three years to make each of its digitally animated movies, and then the movies bring in a lot of revenue from its box office release, and then a steady stream, punctuated by its DVD release, for years.
DWA has faded from the media spotlight a bit in the past year or so, largely because as the banks have cut back, it's lost a lot of its analyst coverage. It's too bad-- DWA is in a sweet spot in the movie industry--these family friendly movies do well across a broad demographic range, and do really well on DVD. And DWA is on the cutting edge of digital animation-- Jeffrey Katzenberg its chief is embracing a shift to digital 3-D.
This year it's big blockbuster will be "Kung Fu Panda," which opens June 6, 2008. Voiced by Jack Black, who's always a draw, this film has the huge advantage of being about China and Kung Fu-- hugely appealing to the international audience, which is more important to the movie industry than ever. WIth the Bejing Olympics this summer, this movie couldn't be coming at a better time.
Questions? Comments? MediaMoney@cnbc.com