The ‘Shrek’ shift is on

'Cars' forces D'works fav to find new parking space

“Shrek 3” is moving from fall 2006 to May 2007 as pics continued to be reshuffled in the wake of Disney and Pixar’s decision to delay “Cars” to June 2006.

News came as newly public DreamWorks Animation had its first earnings report of $241.3 million in revenue for the third quarter and net income of $20.3 million. Numbers come almost entirely from the success of “Shrek 2,” which is expected to gross more than $900 million theatrically worldwide and sell 55 million homevideo units.

DreamWorks CEO Jeffrey Katzenberg said Pixar’s announcement that “Cars” and all subsequent films from the toon house will be released in the summer left him confident that “Flushed Away,” a co-production that will be stop-motion animation house Ardman’s first foray into CGI, will be able to compete effectively in fall 2006. He added that performance of the first two “Shreks” demonstrated that May remains the optimal release date for future franchise titles.

Company also delayed release of its planned direct-to-DVD “Shrek 2” spinoff, “Puss N Boots,” until 2008 and said beginning then, DreamWorks Animation hopes to begin a regular pattern of releasing one original film, one sequel and one direct-to-DVD pic each year.

While the October release “Shark Tale” wasn’t part of third-quarter earnings, DreamWorks chief financial officer Kris Leslie said the pic is on track to bring in $315 million in worldwide B.O. by the end of the year. The recently released “Shrek 2” DVD is expected to sell 37 million units by year’s end.

Company is planning to release “Shark Tale” on homevideo in February.

Leslie also disclosed what DreamWorks Animation has done with the $625 million it raised in its October IPO: $355 million was used to pay on a $405 million load of credit it picked up from former parent company DreamWorks Studios. The remaining $270 million is being used for corporate purposes such as debt repayment, taxes and working capital.

Of company’s total revenue, $194.9 million, 81%, came from “Shrek 2,” which hit theaters in May but continued to perform worldwide in the July-September quarter. Remaining revenue came from library titles on homevideo, primarily the re-release of “Shrek” tied to the sequel.

Revenue more than quadrupled from a year ago, when “Sinbad: Legend of the Seven Seas” flopped and company had a net loss of $35.9 million.

Beginning in the current quarter, DreamWorks Animation has entered a formal distrib arrangement with DreamWorks Studios in which it pays its former parent for marketing and distribution costs plus an 8% fee. As a result, company’s rev will go down by the amount it pays DreamWorks Studios.

If such a deal had been in place in the third quarter, DreamWorks Animation revenue would have been $161.6 million.

With revenue from “Shrek 3” now not coming until the second quarter of 2007, DreamWorks Animation stock was down 5% in after-hours trading after rising 2% to $40.20 before earnings were announced.

Similarly, Pixar shares fell 5% on Wednesday on news it was delaying “Cars.”

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