SEC investigating toon arm over first-quarter results

The problems DreamWorks Animation is having with the Securities and Exchange Commission is carrying into its live-action unit.

That became clear after an article ran in Wednesday’s New York Post saying NBC Universal was in talks to acquire DreamWorks’ live-action division.

The story said a spokesman for DreamWorks “denied it was for sale.”

Within hours, DreamWorks fired off a statement, declaring that the comments attributed to DreamWorks were not authorized and that “as a matter of policy, (DreamWorks) does not comment on such matters.”

Why so touchy? Because the Securities and Exchange Commission is investigating DreamWorks Animation over stock trading and first-quarter results.

Although DreamWorks’ live-action division and DreamWorks Animation are separate companies, they’re kindred in the eyes of lawyers because they do business together — DreamWorks is paid a fee to market and distribute the toon company’s pics.

Since DreamWorks Animation can’t comment to the press under the terms of the SEC investigation, neither can anyone else at DreamWorks.

The kerfuffle is the latest DreamWorks has experienced since the toon unit — which had been privately held since it was founded in 1994 along with the rest of the company — became a public company, susceptible to the rules as understood by Wall Street.

Besides the SEC investigation, the company faces six shareholder lawsuits over overly optimistic predictions for sales of “Shrek 2″ DVDs, and its stock has fallen almost 39% for the year. Company also canceled a $500 million secondary stock offering.

As for the sale of the live-action company to Universal, sources deny that a deal is done but say there has been talk. That David Geffen, who made his career by buying and selling companies, is now overseeing the underperforming unit, suggests the rumor may not be so off base.

DreamWorks, of course, would not comment.

Filed Under:

Follow @Variety on Twitter for breaking news, reviews and more