×

China’s Oriental DreamWorks Looks Set to Restructure (EXCLUSIVE)

UPDATED: Oriental DreamWorks, the production joint venture between DreamWorks Animation and Chinese partners, may be restructured, according to well-placed sources in China.

The sources say that Comcast is in talks with Oriental DreamWorks’ Chinese backers, including China Media Capital and Shanghai Alliance Investment Ltd., about possibly giving up DWA’s 45% stake in the venture. If that happens, it would mark the end of one of the highest-profile linkups between Hollywood and China.

The potential restructuring comes as Oriental DreamWorks struggles to maintain a foothold in the competitive animated-feature marketplace. Its last outing, “Kung Fu Panda 3,” failed to perform as well as expected at the box office, and its only film currently slated for release, the Himalayan tale “Everest,” is not due out until September 2019. Last week, the company laid off some 40 animators at its Shanghai base.

At the same time, Glendale-based DWA has been re-evaluating the projects in its own pipeline, canceling “The Croods 2” and, most recently, “Larrikins,” which was to have starred the voices of Hugh Jackman and Naomi Watts.

Popular on Variety

With Universal maintaining its own presence in China, including a distribution operation, Oriental DreamWorks came to be viewed as superfluous. “It’s not because it’s not an important or successful business, it just duplicates what they already have in China,” said one individual close to the company.

Contacted by Variety, China Media Capital said it was not taking media inquiries at the present time. Efforts to reach DreamWorks Animation and Comcast have also not been successful. Universal Pictures, which oversees DreamWorks, declined to comment.

Established in 2012, Oriental DreamWorks brought together two of the biggest names in film and media on either side of the Pacific: Jeffrey Katzenberg and Li Ruigang, who heads China Media Capital.

But the company has consistently struggled, despite a tentative diversification from animation into live action. In animation circles it was sometimes said that DWA was the only Hollywood company to go to China and operate with higher costs than in the U.S. At its peak, in 2014, Oriental DreamWorks had a staff of 250.

That number is now below 100. “We’ve had a number of Oriental DreamWorks animators send us their resumes in the past few days,” said Gordon Chin, CEO of Shenzhen-based Puzzle Animation.

Oriental DreamWorks has been involved in four feature productions to date: “The Penguins of Madagascar,” “How to Train Your Dragon 2,” “Home” and “Kung Fu Panda 3.”

“Panda 3” was structured as a full co-production between China-based Oriental DreamWorks and U.S.-based DWA. That meant the film was treated as local in China, which allowed it to play longer in Chinese cinemas and gave it a larger proportion of the box office revenue than an imported movie. Its $154-million haul in China, in early 2016, was the film’s biggest territory gross – ahead of North America with $144 million – but was considered a modest disappointment at the time.

That performance may now look more respectable given the sharp slowdown of the Chinese box office in the second half of 2016. But it is notable that Oriental DreamWorks has not significantly expanded its slate of feature productions since “Kung Fu Panda 3.”

Only “Everest,” which tells the story of a girl who tries to bring a yeti from the Himalayas back to Shanghai, has been scheduled for release. Largely financed by Oriental DreamWorks, and involving both Oriental DreamWorks and DWA, 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”).

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 is not clear if the probe has had any impact on Oriental DreamWorks.

More Film

  • Balloon

    'Balloon': Film Review

    On paper, the plight of a pair of families fleeing 1979’s East Germany in a hot air balloon sounds like fabricated fodder for a spy novel. But as implausible as it sounds, this “The Mysterious Island”-esque grand escape from Deutschland’s then walled-in, oppressive slice really did happen. And nearly four decades after being the subject [...]

  • J.D. Dillard Star Wars

    New 'Star Wars' Movie in Development With 'Sleight' Director, 'Luke Cage' Writer

    Lucasfilm is developing a new “Star Wars” feature film with “Sleight” writer-director J.D. Dillard and “Luke Cage” writer Matt Owens, Variety has confirmed. The project is still in its very early stages, and all further details — characters, location, time period within the “Star Wars” creative galaxy — remain a mystery. That includes whether Dillard would [...]

  • Foster Boy

    Shaquille O'Neal on Why Foster Care Is the Great Untold Story

    It’s no secret that I have suffered some losses lately. For better or worse, my pain and grief are public. But I understand the opportunity to face the pain, learn from it, and model a behavior. I wouldn’t want it any other way. But there are hundreds of thousands of kids across the U.S. — [...]

  • Emerald Run

    'Emerald Run': Film Review

    “Emerald Run” is one of the weirdest hodgepodges to make its way to theater screens and digital platforms in quite some time. Unfortunately, oddness is just about the only thing this muddled little indie has going for it. Despite the game efforts of lead actor David Chokachi and attractive lensing by DP Michael Caradonna, the [...]

  • The Call of the Wild

    Box Office: 'Call of the Wild' in Surprisingly Tight Race With 'Sonic the Hedgehog'

    “The Call of the Wild” and “Sonic the Hedgehog” are in a tight race for first place at North American multiplexes, with as much as $27 million each, early estimates showed on Friday. Disney-20th Century’s launch of Harrison Ford’s “The Call of the Wild” is coming in well above pre-release forecasts, which had been in [...]

  • Hidden Away

    'Hidden Away': Film Review

    Antonio Ligabue holds an unusual place in the annals of mid-20th-century Italian art, championed by those who feel his boldly-colored, largely naive paintings are the product of a self-taught artist whose mental incapacities prove that natural spirit transcends training and intellect when wielding a paint brush. Wherever one falls on Ligabue’s talents, making a film [...]

  • The Intruder

    'The Intruder': Film Review

    Take two parts De Palma, one part Zulawski, four parts “Berberian Sound Studio” and dissolve the whole in about a million parts water, and the resultant dilute solution might approximate “The Intruder,” an oddly flavorless supernatural psycho-thriller from sophomore Argentinian director Natalia Meta. The claustrophobically close-up tale of a woman’s mental unraveling in the wake [...]

More From Our Brands

Access exclusive content