DreamWorks Animation, in announcing their third quarter financial results Tuesday, also revealed that David Geffen is exiting the studio's board, per VARIETY. He remains a 22 percent voting power as a major shareholder, but it was unclear how much he will retain after leaving.
Geffen has announced he is retiring from show business, and declined to join the new DreamWorks Studios after the departure from Paramount. Company rules dictate that Geffen's take, combined with CEO Jeffrey Katzenberg's 47 percent, retain majority control.
"As one of DreamWorks' original founders, his vision and commitment have been vital throughout our 14-year history," Katzenberg said on a conference call with analysts. "I look forward to working with David as a trusted adviser going forward."
For the quarter ended September 30, 2008, DreamWorks Animation reported total revenue of $151.5 million and net income of $37.4 million, or $0.41 per share on a fully diluted basis. This compares to revenue of $160.8 million and net income of $47.0 million, or $0.47 per share on a fully diluted basis, for the same period in 2007, a six percent drop in overall revenue.
To date, KUNG FU PANDA has reached approximately $415 million in international box office and over $630 million worldwide, making it DreamWorks Animation's most successful original film of all time.
"Driven by the film's exceptional theatrical performance on a worldwide basis, the company has found in KUNG FU PANDA its third franchise," said Katzenberg. "We look forward to continuing our 2008 success with our next theatrical release, MADAGASCAR: ESCAPE 2 AFRICA, which comes to theaters in the U.S. on November 7 and across the globe this holiday season."
Investors were more focused on next year's 3-D release, MONSTERS VS. ALIENS. The tightening credit markets have slowed the conversion to digital screens, and Katzenberg said he was "hopeful" there will be at least 2,500 digital screens by the time MONSTERS is released. That figure, less than half of all domestic screens, was the low end of Katzenberg's predication as recently as July.
"Ideally, I would have loved to launch with much wider distribution than is going to be available," he said. "But that's about an upside opportunity, not a downside liability." Katzenberg said he is confident that DreamWorks will not lose money on the extra $15 million it is spending to convert MONSTERS to stereoscopic 3-D.
In the future, he said, the format should prove profitable, and by May 2010, when SHREK GOES FOURTH is release, an expected 70 percent of admissions will be for digital 3-D screens. Like IMAX, theaters can charge more for digital.
In the third quarter earnings, KUNG FU PANDA contributed approximately $63.3 million in revenue, primarily from international box office receipts in the period.
The company's 2007 summer blockbuster, SHREK THE THIRD, contributed approximately $32.5 million of revenue to the quarter, driven primarily by international pay television. Through the third quarter, the film reached an estimated 20.5 million home entertainment units shipped worldwide, net of actual and estimated future returns.
BEE MOVIE, the company's 2007 fall release, contributed approximately $27.3 million of revenue to the quarter, driven primarily by domestic pay television. The film reached an estimated 7.5 million units shipped worldwide through the third quarter, net of actual and estimated future returns.
FLUSHED AWAY, the company's 2006 fall release, and OVER THE HEDGE, the company's 2006 summer release, delivered $2.6 million and $2.4 million of revenue, respectively, primarily from international pay and free television.
Library and other revenue contributed approximately $23.4 million to the third quarter, driven by continued catalogue home entertainment performance and international free television.
Looking ahead to the remainder of the year, the company's fourth quarter results are expected to be driven primarily by the home entertainment performance of KUNG FU PANDA, which will be released on DVD and Blu-ray domestically on November 9, 2008.
The company's next theatrical release, MADAGASCAR: ESCAPE 2 AFRICA, is scheduled to open domestically on November 7, 2008. The company does not expect to generate significant revenue in the fourth quarter from the distribution of this title, as its distributor may not have recouped its upfront marketing and distribution costs.
