DreamWorks' entertainment attorney Skip Brittenham is working with investment banks J.P. Morgan and Goldman Sachs to initiate an IPO proposal of the entertainment company's animation division, reported VARIETY. The trade publication quotes a source as saying "the likelihood of an IPO at about 60%. But studio execs are 100% committed to trying to make the plan work." It's estimated that the offering would be timed around the premiere of DreamWorks' next animated feature SHARK TALE, which bows in theaters Oct. 1, 2004. Details of whether it would proceed or follow the release are not known.
The company hopes the success of SHREK 2, which opens May 21, will peak the interests in potential investors. Wall Street insiders feel that an animation offering would be enticing to stock market players due to the overwhelming success of the 3D animation market, which is lead by Pixar. In addition, the spinning off of the animation division rather than the entire company look like a safer investment considering the weak performance of other entertainment company stocks and DreamWorks lack of a TV or international film distribution arm.
This move would allow DreamWorks's investors, which includes former Microsoft founder Paul Allen, to recoup their initial investments. Allen has infused nearly a billion dollars into the company since its launch in 1994.
Founded in 1994 by Steven Spielberg, Jeffrey Katzenberg and David Geffen, DreamWorks is supported by equity stakes by billionaire Paul Allen and other outside investors. A co-founder of Microsoft and controlling shareholder in cabler Charter Communications, Allen has invested approximately $1 billion in DreamWorks over the past decade.
DreamWorks officials declined comment on the prospects of an animation IPO. But a well-placed source said execs have begun prepping the company for Street scrutiny.
Overhead is being scrutinized, with an eye toward improving the studio's balance sheet. Workforce may be pared modestly through attrition over the next several months, but no layoffs are expected.