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DreamWorks Animation Revenue Down

14 Nov, 2005 By: Jessica Wolf

As expected, DreamWorks Animation reported no revenue from the home video release of Shrek 2 in the company's third quarter, which ended Sept. 30.

The title remains “unrecouped” thanks to a deluge of returns in the first quarter this year, company CFO Kristina Leslie said in an investor call last week.

Revenue for DreamWorks third quarter 2005 totaled $87.1 million resulting in a net loss of $0.7 million or ($0.01) per share. This compares to revenue of $241.3 million and a net income of $20.3 million, or $0.26 per diluted share for the same period in 2004.

DreamWorks sold just under 2 million units of Shark Tale in the third quarter, Leslie said.

DreamWorks expects results for the fourth quarter to be primarily driven by the performance of the Madagascar home video, which streets Nov. 15.

Since DreamWorks has not released a new home video product since Shark Tale, the company had “nothing additional to report on the state of the home video market,” Leslie said.

“We will remain cautious and continue to monitor the market closely,” she said.

DreamWorks CEO Jeffrey Katzenberg is optimistic about Madagascar's chances in the competitive DVD market.

“The Madagascar home video raises the bar for added value home video content,” he said, noting specifically a Christmas-themed short starring the Madagascar penguin characters and more than 100 interactive games and activities.

Madagascar has the potential to become the company's next franchise,” he said. DreamWorks has already scheduled a theatrical Madagascar sequel and a direct-to-video Penguins release set for 2009. The film has earned more than half a billion dollars in worldwide theatrical release.

DreamWorks is keeping a close eye on that new franchise as it hits DVD.

“We have gotten much more granular in our monitoring and tracking of sales in the domestic and international markets,” Katzenberg said. “Having said that we do have an aggressive campaign to support the film as it goes into home video, both direct to consumers and at retail.”

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