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DreamWorks Animation Taps Fox for Distribution

20 Aug, 2012 By: Erik Gruenwedel, Chris Tribbey

DreamWorks Animation has selected 20th Century Fox Studios to distribute its movies, including home entertainment — replacing longtime distributor Paramount Pictures.

Fox, including 20th Century Fox Home Entertainment, will assume certain marketing and distribution responsibilities — including packaged media, digital and subscription video-on-demand — in both domestic and international markets for all animated feature films produced by DreamWorks Animation in 2013 through 2017.

DreamWorks Animation retains domestic television distribution rights.

For worldwide theatrical and home video distribution, as well as international TV, Fox will receive 8% of the cut, the same fee agreement DreamWorks Animation had with Paramount. For a majority of digital venues Fox will earn a 6% distribution fee.

“The one real difference here is, seven years later, there are certain capabilities we’ve now built within DreamWorks, things we have the capability to do ourselves, where we didn’t have the capability, and needed to rely on Paramount, seven years ago,” DreamWorks Animation CEO Jeffrey Katzenberg said during a conference call with reporters.

He pointed to a long-term deal with Netflix that gives the service exclusive access to DreamWorks Animation titles starting in 2013. That agreement extends beyond the Fox contract, Katzenberg said.

“There’s no need for [Fox] to service DreamWorks in domestic television, because those are arrangements that already exist for us,” he said.

Katzenberg added that Fox won the rights due in part to “favorable economics.”

“[Fox is] a consistent top-tier player both domestically and internationally, and a category leader for big-box retailers,” Katzenberg said. “We believe the combination of our business with theirs can make Fox the No. 1 distributor in the world in future years.”

Fox beat out Sony Pictures, including Sony Pictures Home Entertainment, which had been rumored to possibly pick up the lucrative rights. Katzenberg said DreamWorks looked at self-distribution, Sony and other studios, but “in the end the world-class distribution capabilities of Fox and the leadership of [Jim Gianopulos and Thomas Rothman, co-chairmen of Fox Entertainment Group] were awfully compelling. They run an incredible organization there. Their performance on home movies has been very impressive.”

Katzenberg called Sony “an outstanding company” and admitted passing on that studio “wasn’t an easy decision.”

DreamWorks Animation last August first announced it would be seeking a new distribution partner when its contract with Paramount expired this year. Paramount’s final DreamWorks title is the pending theatrical release Rise of the Guardians.

“We’ve enjoyed a fantastic working relationship with Paramount over the last six years, which resulted in a dozen profitable films in a row for us at the box office,” Katzenberg said. “They’ve done an excellent job distributing our movies on a worldwide basis.”

Paramount will retain the distribution rights for some DreamWorks Animation titles for a couple years, before they revert back to DreamWorks. Katzenberg would not share which titles or for how long.

“It’s different times for different movies, and some will come back sooner than others,” he said.

He noted that when DreamWorks first went to Paramount in 2006, it brought along 400 employees, many of them integrated into Paramount, some remaining as leaders of the studio today.

“That’s not the case here,” Katzenberg continued. “In every area Fox is a world-class distributor and in many of the important and valuable places for us, the leader. They are the leading company in worldwide home video, the category leader in big-box retail … there’s no need for us to be doing anything other than stepping back and putting the product in their hands. We’re very confident of that.”

Paramount launched its own animation division (Paramount Animation) in mid-2011, with its first film, The SpongeBob SquarePants Movie 2, scheduled for a 2014 release.

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