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DreamWorks Animation's Quiet Q1

2 May, 2006 By: Jessica Wolf

It was a quiet first quarter for DreamWorks Animation SKG.

For the first quarter of 2006, DreamWorks Animation reported total revenue of $60.1 million and net income of approximately $12.3 million, the company reported May 2. That's a 64% drop over first-quarter 2005's $167 million in revenue, and a 73% drop in net income compared to last year's $45.7 million.

With no new movies in either the theatrical or home video pipeline, the supplier attributed nearly half ($30.7 million) of its first-quarter earnings to continued Madagascar DVD sales.

Madagascar has sold about 17.5 million net units on home video worldwide.

Shark Tale brought in $13.1 million for the quarter, mostly from international TV distribution. Video sales for the catalog title stand at 17.9 million units worldwide as of the first quarter.

The studio is banking on the upcoming Over the Hedge, which opens in theaters May 19, for any real earnings this year.

However, DreamWorks president Lew Coleman said he is cautious about looking ahead for the year, noting that Over the Hedge comes out alongside other big summer blockbusters like Sony Pictures' The Da Vinci Code.

DreamWorks garners no revenue from titles until its distributor has recouped costs, usually well into a title's home video release. For this year, that could mean the fourth quarter, when Over the Hedge hits video, said company CFO Kristina Leslie.

Over the Hedge represents DreamWorks Animation's first title to be released under the studio's new distribution partnership with Paramount Pictures. Paramount parent company Viacom bought DreamWorks Pictures early this year, and with that also acquired rights to distribute DreamWorks Animation titles in theatrical releases and on home video.

“We're very impressed with [Paramount's] efforts in making this new relationship successful,” Coleman said.

DreamWorks is encouraged by the support it's already seen for Over the Hedge from Viacom-company Nickelodeon, Coleman said.

Previous DreamWorks distributor Universal Studios still has unrecouped costs for titles Shrek 2 and Wallace & Gromit: The Curse of the Were-Rabbit to the tune of $13.2 million and $6.7 million, respectively, through the end of the quarter, Leslie said. Wallace and Gromit has sold 13.3 million net units worldwide, she said.

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