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Katzenberg Might Leave Dreamworks: Stunning New Details from Comcast Negotiations

If Comcast is able to acquire Jeffrey Katzenberg’s Dreamworks Animation, Katzenberg would likely exit the company as part of the deal, The Wall Street Journal reported this evening.

Katzenberg would leave not because Comcast doesn’t want him running the movie division, but because as we suggested last night, Comcast doesn’t really even want Dreamworks feature animation capabilities.

The reality is that Comcast already owns Despicable Me maker Illumination Entertainment, which makes far higher-grossing films at almost half the cost that Dreamworks does. It doesn’t need to maintain a second, more-expensive-to-operate studio. The appealing part of Dreamworks is its IP, which Comcast can use synergistically across its various divisions, including NBCUniversal.

Per the Wall Street Journal:

Rather than continuing as an independently run subsidiary, DreamWorks Animation would be mined for intellectual property ranging from Madagascar to Lassie that could be used in toys, T-shirts and theme-park attractions, the people said. In addition, the studio has in the past few years built a small but potent television business that NBCUniversal hopes could make it more competitive in children’s programming and help it to adapt other movie properties, from Fast and Furious to Pitch Perfect, for the small screen.

In potentially spending billions to acquire a repository of intellectual property it can exploit through its numerous businesses, Comcast is pursuing a strategy similar to one followed over the past decade by Walt Disney Co. with acquisitions such as Marvel Entertainment Inc. and Lucasfilm LLC.

NBCUniversal, whose top ranks include several former Disney executives such as Chief Executive Steve Burke, has more than doubled investment in its theme parks, spending $2 billion between 2013 and 2015, and expanded its consumer-products business to more than $100 million in annual revenue last year, from $30 million before the cable company took over in 2011.

While still small compared with Disney, those businesses are growing fast and could accelerate with the infusion of new intellectual property. NBCUniversal has also lagged behind competitors such as Disney to date in using its movie franchises on its suite of television channels.

So, where would that leave Dreamworks’ most well known component, its feature animation division? According to the latest reports, Comcast would leave the decision to Illumination head Chris Meledandri, who “would be tasked with looking under the hood of DreamWorks Animation and determining what movies it should produce as part of Universal.”

Layoffs on both the production and administrative side are likely, sources told the WSJ. Katzenberg would receive not only $21.9 million for leaving Dreaworks, but because he owns more than 60% of the studio’s stock, he could potentially receive billions from the sale.

As a final note, it’s important to remember this deal hasn’t been finalized and could fall apart at any time, like the previous attempts to sell the company. But the writing is on the wall, and whether it’s this deal or another deal, it’s becoming clear that media companies are less interested in Dreamworks feature animation studio than the possibilities of exploiting its intellectual property holdings.

(Photo at top: Shutterstock.com)

  • Revy

    Hopefully Illumination tells Comcast to simply restructure DFA to produce more reasonably budgeted films instead of just gutting the studio. Say what you will about the cost of their productions or their creative/financial success, but DFA has arguably the most talented staff in the industry under one roof. To lose that because Comcast is just trying to imitate Disney would be a major loss of future potential.

    I mean, don’t they realize one day they’ll want to have made NEW franchises to exploit? You can’t ride on Shrek and Madagascar forever, even Katz knows that, however misguided his new property attempts have been.

    • M3D1T8R

      DW Animation over the last couple years has already drastically reduced the cost of producing each of their films. (From around 170M to under 140M if memory serves.)

  • Mack

    Kinda surprised DreamWorks wasn’t more attractive to even a company like Disney. I’d think even just a ‘cinematic universe’ – or, heck, a ‘television universe’ – with the Rankin-Bass holiday characters would be very valuable.

  • Steve

    The best case scenario would be to utilize the extreme talent at DWA to make better films. Like when John Lasseter took over for Disney and now Disney Animation is back on top. To liquidate the studio and people, and dissolve such a talented group would be idiotic. They just need a more visionary leader.

  • jawsnnn

    So does this mean no more Kung Fu Panda, HTTYD movies? If that is so, its a real shame. Dreamworks was turning out more adventurous and quality movies than any major animation studio in memory. They may have been hit and miss (Home comes to mind), but their good ones were real good.

    • Inkan1969

      Maybe Illumination Entertainment will make those franchise movies now.

  • Steven Bowser

    Does Dreamworks Animation have any films in production? Aren’t they supposed to put out one more Dragons movie?

  • Inkan1969

    I wouldn’t mind seeing Dreamworks TV animation create original programming instead of TV adaptations of feature films. “Toonsylvania” and “Invasion America”, I think that’s been it.

  • Inkan1969

    Are Steven Spielberg and David Geffin still involved in Dreamworks?

    • Meet the new boss…..

      No. They haven’t been in years. Geffen sold off his ownership years and years ago. Spielberg’s involvement in animation became less and less with each feature after Prince of Egypt. One Dreamworks Animation went public, they split relations with Dreamworks (live action), and Spielberg’s involvement became pretty much non-existent. The only letter left in “SKG”, was Katzenberg….and arguably, the least talented, creative-wise of the 3. Brilliant businessman, but doesn’t know the first thing about the creative process of making animated movies. Things can only get better if he becomes less involved with Dreamworks Animation.

  • GabzGirl

    Good films? Uh… *looks at Trolls* besides KFP and HTTYD, mmmmaybe Croods, I wouldn’t say their most recent films have been good. More like okay to mediocre.

    • Barrett

      The first Shrek was solid, and Madagascar 1 and 3 were both very good in their own ways. Also, many people seem to forget two excellent animated films DWA did, their first two, actually; Prince of Egypt and The Road to El Dorado.

  • Meet the new boss…..

    Yes. Please. Management has long been the cancer inside Dreamworks that has been running films inefficiently, running up costs, and the artists are the ones who pay the price. Ridiculous schedules, mass layoffs when an ill-conceived film doesn’t perform well. They need to turn Dreamworks upside down, and shake all the shit out. Maybe take a look at anyone with the title, “Creative Executive” on their business card. What an oxymoron.

    • Barrett

      More than that, it’s probably not worth trying to salvage ComcastWorks, since its inevitable they will shitcan many of the artists and cancel some, possibly all of the films not close to completion. In much the same way DWA was initially formed as a rival offshoot from Disney, somebody or somebodies with money need to work with some experienced animation people to start a new studio. Hire the laid-off talent and actually let them produce something, not get choked to death in a byzantine hidebound bureaucracy.

      The removal of Katzenberg is a good move, but came too late. Just start over, in a lean & mean mode with a new light organization. And this time, don’t try to be your own distributor – line up a deal with one of the major studios that lacks an animation wing/partner before launch, maybe get them to chip in a minority stake if need be.