DreamWorks Animation Takes $57M Write-Down on 'Penguins of Madagascar'
'The Penguins of Madagascar'
Courtesy of DreamWorks Animation
by Paul Bond
2/24/2015 1:07pm PST
DreamWorks Animation took a $57.1 million write-down primarily on the lackluster performance of Penguins of Madagascar,as well as Mr. Peabody and Sherman, the beleaguered film studio announced Tuesday while posting less-than-expected quarterly financial results.
The company also said Tuesday that it intends on raising money by selling its Glendale campus for $185 million, then leasing back the space.
The film studio run by CEO Jeffrey Katzenberg posted a loss of $3.08 per share in the fourth quarter, while analysts predicted a loss of $3.01. Revenue was $234.2 million, while analysts expected $246 million.
Shares of DreamWorks Animation rose 2 percent to $21.13 on Tuesday, but dropped 9 percent in the after-hours session after Wall Street got a look at the fourth-quarter results.
DreamWorks Animation had signaled a month ago that Penguins would likely result in a write-down of approximately $55 million, and at that time the studio also announced a restructuring that included 500 layoffs and a charge of about $290 million. On Tuesday, the studio said restructuring charges were $210.1 million, with $54.6 million attributable to employee termination costs and $155.5 million due to production costs of unreleased projects like B.O.O.and Monkeys of Mumbai.
Despite massive layoffs, Katzenberg says spirits are high among the remaining staff.
"There's a great morale around the company right now even in the face of what has been, without a question, the hardest, most difficult, most painful eight weeks in our 20 -year history," Katzenberg said Tuesday during a conference call.
DreamWorks Animation also said a month ago that it was scaling back to only two film releases a year, though in 2015 it has just one: Home, which opens March 27.
Penguins was made for $132 million, and it has earned $358 million worldwide since its release Nov. 26, not enough to show a profit given marketing expenses and box-office splits with exhibitors. Peabody was made for $145 million and earned $273 million since its release nearly a year ago.
The financial results also come as the studio recovers from disappointment at Sunday's Oscar show, where Disney's Big Hero 6 took the award for best animated feature even though DreamWorks Animation's How to Train Your Dragon 2 was widely considered the favorite in that category.
On Tuesday, Katzenberg said the studio will at least break even this year as long as Home breaks even or earns a profit. He also boasted of having delivered 40 episodes of TV shows to Netflix so far and he expressed enthusiasm for a DreamWorks Animation TV channel that will launch in countries across Asia this year. The company expects up to $250 million in TV-only revenue this year.
In the fourth quarter, DreamWorks Animation said $131.3 million of its revenue came from feature films, the biggest contributor being How to Train Your Dragon 2. Revenue from TV was $50.7 million, and revenue from consumer products was $22.1 million.
The company also introduced a new segment, "new media," which is where its 75 percent interest in Awesomeness TV will now reside. Revenue in the new segment was $24.9 million in the fourth quarter.
"Although 2014 was a challenging year for our company, I am confident that our recent announcement to restructure our feature film business will enable us to deliver great films and better box-office results," Katzenberg said.
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