UPDATE, 2:25 PM: DreamWorks Animation shares jumped all over the place in after-hours trading when the company reported its earnings — but settled at -2% as CEO Jeff Katzenberg discussed his expectations and plans. He talked up Puss In Boots, predicting that it will set a record this weekend by generating more than $33.6M at box offices — that’s the previous high for a pre-Halloween release. “Anything beyond that goes into the ‘win’ column,” he says. Much of the revenue will come from sales of high-priced tickets for the 3D version. “Almost every review (of the movie) singled out the quality of the 3D experience,” Katzenberg says. “It’s meaningful.” He provided few details about his recent agreement to offer his films to Netflix instead of HBO in the premium TV window but calls the new arrangement “historic” for DreamWorks as well as “the industry as a whole.” Katzenberg was equally vague about the company’s thoughts about negotiating a new distribution deal to replace the one with Paramount that expires at the end of next year. “We will be considering all our distribution options starting in spring of 2012,” he says adding that he expects to have something in place next summer. Katzenberg says that DreamWorks has paid about $700M in distribution fees for 11 movies that generated $5.5B at worldwide box offices, and $10B from sales in all venues.
Asked about the changes in his employment contract, Lew Coleman said that they reflect “the old guy option more than anything else.”
PREVIOUS, 1:12 PM: DreamWorks ended 3Q with net income of $19.7M, down 50.6% vs the same period last year, on revenues of $160.8M, down 14.9%. Earnings at 23 cents a share were slightly ahead of the 22 cents that analysts expected. But they also predicted that DreamWorks would generate $163M in revenues. “DreamWorks Animation’s financial results tend to fluctuate due to, among other factors, the timing of our feature film releases and the number of our films in any given year,” president Lew Coleman says. “This is the case in the third quarter of 2011, in part because our financial results reflect the timing of the international theatrical release of Kung Fu Panda 2 this year compared to Shrek Forever After in 2010.” DreamWorks says that Kung Fu Panda 2 contributed $39.4M of revenue in 3Q while Megamind added $25.8M, mostly from domestic pay TV. In addition, Shrek Forever After contributed $15M while How To Train Your Dragon added $9.2M, mostly from international pay TV and worldwide home entertainment.
Separately, DreamWorks said in an SEC filing that it extended Coleman’s contract to the end of 2016. Beginning November 1 he’ll receive an annual base salary of $2M, up 58.5% from his previous agreement, but won’t receive an annual incentive award like the one he had which had a target value of $1M. He will stop receiving an annual equity grant, which the company had valued at $500,000. Also, the target for Coleman’s long-term equity incentive award was reduced to $1M from $2.75M.
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