David Geffen’s departure from DreamWorks is complete.
DreamWorks Animation announced on Tuesday that the company co-founder is ankling the toon studio’s board. Move comes soon after he declined to join the newly formed DreamWorks Studios following its departure from Paramount.
Mogul remains a major shareholder in DreamWorks Animation, with approximately 22% of the company’s voting power. It’s not clear how much of that he’ll maintain now that he has left the board. However, company rules require that Geffen’s take, combined with that of CEO Jeffrey Katzenberg, who has 47% of the voting stock, 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.”
News came as DreamWorks Animation reported strong earnings for the summer quarter driven by boffo returns for “Kung Fu Panda,” particularly in foreign markets. Pic has grossed $630 million worldwide, with $415 million of that coming from overseas. It generated $63.3 million in revenue for the toon studio after distributor Paramount took its cut and recouped costs. A sequel has already been announced for 2011.
Overall revenue was $151.5 million, down 6% from the same quarter last year, while profits fell 20% to $37.4 million. Company had a tough comparison last year in “Shrek the Third.” Last year’s summer blockbuster contributed $32.5 million to DWA’s bottom line last quarter, mostly from international pay TV.
“Shrek the Third” has sold more than 20.5 million DVD units. Last fall’s so-so performer “Bee Movie” generated $27.3 million, primarily from domestic pay TV, and has sold 7.5 million DVDs.
DreamWorks’ next release is “Madagascar: Back 2 Africa” on Nov. 7. However, analysts’ attention was more focused on March’s “Monsters vs. Aliens,” the company’s first pic produced in digital 3-D.
Katzenberg admitted that the pace of digital screen deployment has been further slowed due to the tightening credit markets, which make it tough for theaters to borrow the necessary coin. He described himself as “hopeful” that there will be 2,500 digital screens by the time “Monsters” is released, which means pic would be in 3-D on a little less than half of its domestic screens. Back in July, that was the low end of Katzenberg’s prediction.
However, exec expressed confidence that DreamWorks won’t lose money on the $15 million extra it is spending to convert “Monsters” to digital 3-D and said that in the future, the format should prove profitable.
“Ideally, I would have loved to launch with much wider distribution than is going to be available,” he granted in an interview. “But that’s about an upside opportunity, not a downside liability.”
By the time “Shrek Goes Fourth” is released in May 2010, Katzenberg said he expects more than 70% of admissions will be for digital 3-D screens, which typically have higher ticket prices.
DreamWorks Animation stock closed up 7% at $27.49 before earnings were announced.