UPDATE, 2:50 PM: What made Home a hit, after a string of big losses for DreamWorks Animation? Several things, CEO Jeffrey Katzenberg told analysts in a call to discuss Q1 earnings. He credits his decision to change the movie’s leadership team last year to help it find “a tone and a heart.” He says that Fox’s distribution team “hit it out of the park.” For example, it had Jennifer Lopez, one of the voices on the film, perform a musical number on American Idol that later generated about 45 million online views. They also stepped up digital advertising, and tapped all of the stars — including Rihanna and Jim Parsons — to work their social networks.
The studio expects to see revenues from the film this quarter, after Fox recoups its costs. The home video likely will be released in late summer. Why not do it earlier, to take advantage of the theatrical marketing? “The second half of the summer is really strong” for home video, the CEO says. People aren’t distracted by other films “and you’re going to find that every single solitary week for the next eight to 10 weeks.”
PREVIOUS, 1:21 PM: DreamWorks Animation shares bounced around in post market trading after the company released its Q1 earnings report — but now are unchanged from its close.
The report shows a net loss of $54.7 million, 27.6% worse than last year’s Q1, on revenues of $166.5 million, +13.1%. The top line beat estimates for $164.5 million. And while it reported a loss of 64 cents a share, that includes a $31.9 million restructuring charge announced in January. Take that out, and the loss is 37 cents a share vs predictions for a 45 cent loss.
“While 2015 is a transitional year for us, the worldwide box office performance of Home serves as early evidence that the changes we’re making in the core feature animation are working,” CEO Jeffrey Katzenberg says.
Although the film has generated $308 million worldwide — evenly split between domestic and overseas box offices — it was released on March 27, the end of the quarter. That means the company had to recognize the costs in Q1, but has to wait for most of the sales to come in. DWA saw $2.9 million from the film in the quarter, and says it expects that distributor Fox will recoup its costs.
Feature Film revenues in the quarter increased 16.3% to $128.0 million with a gross profit of $41.0 million. Last year the operation lost $25.4 million with a $57.1 million impairment charge for Mr. Peabody & Sherman.
DWA says it saw $2 million from The Penguins Of Madagascar. That’s primarily from overseas markets where Fox doesn’t distribute; it still hasn’t recouped its marketing and distribution costs — although DWA expects that to change in the current quarter.
Meanwhile How To Train Your Dragon 2 delivered $41.4 million, mostly from international pay TV and home entertainment. Peabody & Sherman contributed $31.5 million, also from overseas TV and home entertainment.
The Television Series and Specials unit’s revenues were flat at $18.0 million, although rising marketing costs resulted in a 40% drop in gross profit to $3.5 million.
Consumer Products revenues benefited from location-based entertainment and merchandise sales. Revenues here increased 24.8% to $15.1 million while gross profit was up 8.3% to $6.5 million.