Just as Pixar and Marvel became part of the wider Disney brand, it appears that DreamWorks Animation may have found a buyer in a similarly notable buyer - Comcast Corp. However, DreamWorks Animation SKG Inc. Chief Executive Jeffrey Katzenberg is expected to leave if Comcast Corp. acquires the family-entertainment studio, according to people familiar with the matter.
Sources have said that Comcast could potentially pay more than $3 billion for the animation studio. That figure appears quite significant on its own and a step above DreamWorks’ current $2.35 billion market valuation, but is still less than what both Softbank and Hasbro offered to pay for the company back in 2014. It’s also less than the $4 billion that Disney paid for Lucasfilm and Marvel each, and far less than the $7.4 billion Disney paid for Pixar.
Comcast is one of the largest entertainment and cable conglomerates that already boasts an impressive feature animation program through its ownership of Universal Pictures. Universal is the parent company of Illumination Entertainment, the company behind the ‘Despicable Me’ franchise as well as the upcoming ‘The Secret Life of Pets’. They are also the international distributors of Laika’s stop-motion films, including ‘Coraline’ and this year’s much anticipated ‘Kubo and the Two Strings”.
If a deal between the two companies eventuates, it is most likely that Comcast will stay away from their feature projects and instead buy into DreamWorks’ TV animation division which is quickly becoming a dominant force in animated television having produced hit series such as ‘All Hail King Julien’ and ‘Dragons: Race to The Edge’, as well as upcoming Netflix reboot of ‘Voltron’. The high quality of these series as well as their critical success has lead DreamWorks CEO Jeffrey Katzenberg to regard this division as “our most profitable asset.” The acquisition of these properties, along with Dreamworks’ large catalog of vintage properties that it acquired from Classic Media, would offer Comcast a large volume of children’s content that could be used throughout their broadcast and online outlets.
Negotiations are nowhere near final yet, according to the WSJ, so it is too early to make guesses about how Dreamworks would be merged into Universal’s existing animation operations. While sources are indicating Katzenberg may leave the company if the deal goes through, it may still just be wild speculation and awaits word from the man himself. However,
Katzenberg did tell investors last month that he “fantasized” about merging with another company: Viacom-owned Paramount Pictures. “I could imagine that with a good financial partner coming with us, putting the assets of Paramount and DreamWorks together could be extremely valuable and we could bring a lot to that business,” he said.
Speaking more broadly about the idea of merging with a bigger company, Katzenberg said, “I would want to do it in a way that was a good thing for the company and for shareholders, not just because it would be a good thing to have.”
If the company is sold and Katzenberg leaves DreamWorks, he would receive a total payout of about $21.9 million, according to the company’s most recent proxy statement. Additionally, he controls about 60% of the company’s common voting stock, according to the proxy.
Mr. Katzenberg has been CEO of DreamWorks since it spun off as its own company in 2004, and has been instrumental in sculpting the company into the powerhouse it is today. During his tenure, the company has produced hit animated movies and expanded beyond the multiplex to create divisions that compete with family entertainment rivals in television, consumer products and online video. Successful DreamWorks Animation franchises have included “Shrek” and “Kung Fu Panda.”
Mr. Katzenberg has also been particularly fixated on business opportunities in China, where he launched a joint venture called Oriental DreamWorks that is expected to produce features for Chinese and global audiences in the coming years. It is unclear what he might do if he leaves DreamWorks