Warner Bros. Chief: DreamWorks Animation Sale Won’t Spur Consolidation

Kevin Tsujihara Warner Bros
Eric Charbonneau/REX Shutterstock

Comcast’s $4.1 billion pact for DreamWorks Animation won’t pressure Time Warner or any other media conglomerate to go on a buying spree, Warner Bros. Entertainment CEO Kevin Tsujihara told analysts on Wednesday.

“I don’t think we’ll see more consolidation,” he said during a conference call to discuss Time Warner’s first quarter earnings. “I don’t think [the DreamWorks Animation deal] is going to be a precursor to a lot of transactions.”

There has been speculation that entertainment companies could begin to pool resource through mergers and acquisitions as they try to compete with Disney (the owner of LucasFilm, Pixar, and Marvel) and Comcast (the cable giant that also houses NBCUniversal). Viacom is currently selling a minority stake in Paramount and Lionsgate, the last pure play, publicly traded studio has been the subject of merger speculation.

But Tsujihara doesn’t see many things for sale that could add to Warner Bros.’ arsenal of superhero and animated tentpole films.

“Big franchises are more valuable than ever, but I don’t think there’s a lot of those that are available,” Tsujihara said.

In recent years, Warner Bros. has struggled to replicate its past success, as series such as Harry Potter, the Hobbit, and the Dark Knight have wrapped up. However, Tsujihara told investors he felt good about the longterm growth of Warner Bros., while Time Warner chairman-CEO Jeff Bewkes labeled “Batman v Superman: Dawn of Justice” an important step in establishing DC Comics as a source of future profits.

The superhero movie will kick off a series of interconnected comic book tales that Bewkes said will “captivate audiences for years to come” and will make DC a “growth driver” across the companies film, television, consumer products, and games divisions. The next film in the DC cinematic universe — “Suicide Squad” — hits theaters in August and 2017 will see the release of “Wonder Woman” and a “Justice League” movie.

The executives remarks came after Time Warner reported robust first quarter earnings. Revenues at the film and television company rose 3% to $7.3 billion, while adjusted earnings topped out at $1.49 per share, beating analyst expectations.

In other tidbits from the call:

  • Bewkes sidestepped a question about whether Time Warner networks will be part of the skinny bundle of streaming channels that Hulu is preparing to offer. But Bewkes and HBO chief Richard Plepler emphasized that greater competition and variety of channel bundling in the industry overall is a good thing for Time Warner. “What you’re seeing is a very vibrant rebirth of the strength of TV networks and TV programing across all of these distribution platforms,” Bewkes said. “We think more of it is better for consumers we’re going to try to be available in all the packages that consumers are interested in.”
  • Turner Broadcasting CEO John Martin predicted a winnowing of channels across the TV industry as distributors’ shift the focus of their offerings away from tonnage.
    “There’s too many networks in the United States,” Martin said. “We’ve been saying for years there’s going to be a rationalization of that going forward. …Smaller packages of better networks at lower economic price points (will allow distributors) to attract consumers back in to the eco-system. That will be good for us.”
  • Martin also echoed the bullish sentiments of other media executivess about the coming upfront advertising negotiations. He cited recent scatter market sales of as much as 30% to 50% higher than prices set in last year’s upfront – a dynamic that is expected to push more money into advance commitments. “All signs point to the best upfront we will have seen in years,” he said.
  • Plepler said he would not give subscriber updates on HBO Now’s subscriber numbers. In February, Plepler said that the over-the-top service had roughly 800,000 paying subscribers since launching last April.