Angry at the ogre

Shareholders steamed over 'Shrek 2' sales

Jeffrey Katzenberg may be headed back to court.

The DreamWorks Animation CEO is the target of a new class-action lawsuit over the toon studio’s failure to meet estimated DVD sales for “Shrek 2” last quarter.

Company is also named as a defendant, along with chairman Roger Enrico.

Complaint, filed in U.S. District Court in Los Angeles, alleges that DreamWorks and its top execs knew, or should have known, that “Shrek 2” DVD sales were falling below projections in the first quarter and that they failed to inform investors, instead keeping up guidance that they knew they couldn’t meet.

When company did disclose in early May that it had booked no revenue for “Shrek 2” homevid sales in the first quarter due to higher-than-expected returns, its stock fell more than 12%. Follow-up reports about investor concern over execs’ failure to disclose sales figures earlier, along with what some on Wall Street considered a disappointing opening for “Madagascar,” led its shares to take another 9% hit Tuesday.

“We believe the suit is completely without merit, and we intend to defend ourselves vigorously,” said DreamWorks Animation corporate communications topper Bob Feldman.

Suits like the one filed Thursday are typical after a stock suffers a sudden and unexpected decline.

Many are little more than a law firm’s attempt to recruit a group of plaintiffs in the hope of getting a settlement out of a company that wants to avoid the negative publicity of a trial. Some class-action suits end up raising serious questions and putting hundreds of millions of dollars at stake, though, such as the suit by Disney shareholders over the firing of Michael Ovitz.

Katzenberg himself is a veteran of corporate legal wrangling, having engaged in a high-profile $250 million suit against Disney after he ankled in 1994.

DreamWorks Animation stock closed down 1% at $29.75 Thursday.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Biz News from Variety

Loading