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Oriental DreamWorks: Warner Bros. Reportedly in Talks to Buy Universal Stake

Universal is in talks to sell its stake in Oriental DreamWorks, the China-based joint venture animation company, according to reports.

The Financial Times reported Monday that Universal has held discussions to dispose of the 45% stake in the venture that it inherited when Comcast acquired DreamWorks Animation last year. The majority 55% holding is owned by Chinese investment and media group China Media Capital.

The report says that Universal and CMC have disagreed over strategy at the animation company and that it could be scaled down. Universal has its own access to animation production and may have greater priorities in China than a minority interest in an animation studio that has produced only one feature movie, “Kung Fu Panda 3.”

The Financial Times report quoted CMC boss Li Ruigang pointing  to strategic differences between the two firms.  “I am more focused on just China and less globally, while they want to make films in China for the world. Today the priority of Universal is a theme park in Beijing,” he said.

Last October, the Chinese government announced a surprise antitrust investigation into Comcast-NBCUniversal’s acquisition of DWA. China’s anti-monopoly laws empower the government to investigate foreign deals even if no Chinese companies are involved. It was not clear whether the probe focused on a possible concentration of animation production capacity in foreign hands through Comcast’s ownership of Oriental DreamWorks, or whether the government was more focused on foreign ownership of theme parks in China. Comcast is building a Universal park near Beijing and has a smaller interest in a project in Shanghai. Disney has enjoyed a successful first year with its Shanghai Disneyland, while Fox and Six Flags are also building major parks.

In March, Variety reported that CMC and Universal were both looking at their options concerning Oriental DreamWorks. These included CMC taking control of Universal’s stake for a face-saving nominal price, and then a possible integration of the business with other firms backed by CMC.

Oriental DreamWorks laid off some 40 animators in March. It is understood that other personnel have departed since that time.

“It is very unlikely that Warner Bros. will step into the mix. They may just be being polite to CMC,” one well-placed source told Variety. Time Warner and Warner Bros. have been long-term investors in CMC’s multiple funds. Warner Bros. also has another joint venture with CMC, the Beijing- and Hong Kong-based Flagship Entertainment, whose mission is to produce films for China and global audiences.

Glendale-based DWA has been re-evaluating the projects in its own pipeline. It canceled “The Croods 2” and “Larrikins,” which was to have starred the voices of Hugh Jackman and Naomi Watts. “Kung Fu Panda 3” failed to perform as well as expected at the box office.

DWA’s own productions with release dates include: “How To Train Your Dragon 3,” with a March 1, 2019 date; “Trolls 2” on Oct. 10, 2020; and “The Boss Baby 2″ due for March 26, 2021.”

Himalayan tale “Everest,” due out in September 2019, is the only ODW-backed picture on DWA’s slate currently with a release date. That film is to be co-produced with Oriental DreamWorks, but funding for the film has not been finalized.

“Everest” tells the story of a girl who tries to bring a yeti from the Himalayas back to Shanghai. The film was announced as being directed by Tim Johnson (“Home,” “Over The Hedge”) and Todd Wilderman (“Open Season 2”) and produced by Suzanne Buirgy (“Home,” “Kung Fu Panda 2”). The script was written by William Davies (“How to Train Your Dragon”).

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