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Diversifying Pays Off for DreamWorks Animation on Wall Street

Shareholders reward company for expansion into TV, consumer products, location based entertainment

Building a business that doesn’t rely on just how a movie performs at the box office is helping lift DreamWorks Animation’s stock.

Shares of DWA rose 8.4% on Thursday to close at $26.95, a gain of $2.19.

Traders appeared to spark to DreamWorks Animation’s considerable expansion into television production, through new deals with Netflix and Germany’s Super RTL, along with existing deals with Cartoon Network and Nickelodeon; a push into the consumer products biz and location-based entertainment deals.

SEE ALSO: Nickelodeon Vet Marjorie Cohn to Run DreamWorks Animation Television

The poor performance of “Turbo” in the U.S. didn’t prove to be an issue for stockholders — perhaps given that the toon is still expected to generate a profit for DWA once it’s ended its overseas run. But the reaction may also start to reflect how shareholders often don’t flinch when a film flops at congloms like Disney or Viacom, given that those companies rely less on movies as their core revenue stream.

DreamWorks Animation is also moving into that direction, turning to animated tentpoles to help launch new franchises or keep others alive, while generation considerable coin from other platforms featuring those characters — from TV shows to toys.

SEE ALSO: ‘The Croods’ Rocks DreamWorks Animation’s Second Quarter Results

Also helping is that the company reported better-than-expected results during the second quarter on Wednesday, during which DWA posted higher profits of $22.2 million, up from $12.8 million, and a rise in revenue of $213.4 million, up from $162.8 million, during the three-month period that wrapped June 30. “The Croods” was a big hit for the company during the quarter.

The expansion into TV, and location based entertainment deals with hotels, cruise lines and theme parks has enabled the company to “find pockets of high-margin businesses” that make it “less dependent on new (film) releases,” according to Lewis Coleman, president of DreamWorks Animation.

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