DreamWorks Animation is a hit-driven business—the majority of its revenue is from the release of two or three movies a year – and its stock has been volatile as a result .
But this deal should help even out the company’s income statement—Classic earned $82 million in net revenue and $19.2 million in operating profit in the 12 months ending February 29th. Katzenberg says in the first year it’ll be accretive and will “return value to shareholders quickly.”
The plan is to build on Classic’s library—using those characters like Casper as a starting point to develop TV shows and new movies. And there’s no question that in Hollywood established brands have an advantage—it’s easier to market films or TV shows based on familiar names, and easier to drive people into theaters or to turn on the TV. Katzenberg says there’s a great opportunity to reinvent brands like Lassie and Where’s Waldo “for the 21st Century.” Though Katzenberg has been making a big push to roll out TV shows, and this acquisition certainly fits into that, he’s also thinking about 21st Century distribution, which is digital, mentioning the potential to put together digital channels around this new intellectual property.
Katzenberg’s last big announcement was a big partnership with the China’s leading media companies, to launch a new company called “Oriental DreamWorks,” to develop and produce Chinese animated and live action content. The fact that the China deal brought DreamWorks away from its singular focus on animation sets up the company well as it examines how to develop familiar brands like ‘The Lone Ranger,’ or ‘Lassie,’ which are known for their live action renditions. Even as Katzenberg focuses on churning out three films a year, the TV potential of this library speaks to his plans to build a diversified studio, with all sorts of entertainment for all platforms.
-By CNBC's Julia Boorstin
Questions? Comments? MediaMoney@cnbc.com