TV shows help DreamWorks achieve a ‘Merry’ fourth quarter, beating Wall Street forecasts

TV shows give DreamWorks a ‘Merry’ fourth quarter

LOS ANGELES — Movie studio DreamWorks Animation SKG Inc. said Tuesday that its net income fell in the holiday quarter but a couple of TV specials including “Merry Madagascar” helped the company beat Wall Street forecasts.

The company also expressed optimism about its 2010 lineup, with an unprecedented three movies set for theaters: “How to Train Your Dragon” on March 27, “Shrek Forever After” on May 21 and “Megamind” on Nov. 5.

Chief Executive Jeffrey Katzenberg addressed fears that “Dragon” might get bumped off 3-D screens because Warner Bros.’ “Clash of the Titans” is being released in 3-D a week later and would be competing for a limited a number of screens.

Even if that’s the case, Katzenberg said, “Dragon” will start with far more screens than were available for “Monsters vs. Aliens,” its 3-D release from last March, because theater owners have made great strides to upgrade their facilities.

“We think we’re going to have a very good platform for the 3-D release,” Katzenberg said in an interview.

The company said net income in the fourth quarter fell 16 percent to $43.6 million, or 50 cents per share, compared with $51.6 million, or 58 cents per share, in the same period a year ago. But that’s a lot higher than the 37 cents per share that analysts polled by Thomson Reuters were expecting.

Revenue fell 3 percent to $194 million — far exceeding the $177 million that analysts expected.

Although the results beat forecasts, investors apparently wanted more, sending the stock down 87 cents, or 2.1 percent, to $40.55 in after-hours trading. It had closed up 55 cents, or 1.4 percent at $41.42 on Tuesday, the highest close since Dec. 6, 2004.

The company said its TV shows, led by two holiday specials, “Monsters vs. Aliens: Mutant Pumpkins from Outer Space” and “Merry Madagascar,” contributed $50.4 million in revenue to the quarter. That was nearly $10 million more than the company and analysts were expecting.

A range of other movies that were released on home video and on the international and domestic TV markets also helped the company’s revenues.

“Monsters vs. Aliens,” which came out last March and was the studio’s only theatrical release of 2009, added $29.1 million. “Madagascar: Escape 2 Africa” brought in $23.3 million, while “Kung Fu Panda” took in $17.5 million.

“Shrek the Third,” a movie released in August 2007, brought in $38.6 million in revenue from free TV broadcasts at home and abroad.

DreamWorks is making all its movies in 3-D now, betting that more theaters will quickly upgrade to be able to show films in the format.

“Dragon” will start on at least 2,100 3-D screens in North America, the same for “Monsters,” and 3,800 to 4,000 3-D screens internationally, more than double the 1,500 for “Monsters,” he said. Plus, 294 Imax screens worldwide will be committed to playing “Dragon” in 3-D for at least six weeks straight, he said.

Katzenberg also boasted to analysts that the animated “Dragon,” which was made in 3-D, will be more pleasing to audiences than “Alice in Wonderland,” being released by Disney on March 5, and “Clash of the Titans.” Those rival movies were made in 2-D and are being converted to 3-D in what Katzenberg called a “quick and cheap post-production process.”

Analyst Tuna Amobi with Standard & Poor’s said Katzenberg’s comments alleviated concerns that a shortage of 3-D screens could crimp profits.

“The stars seem to be aligned for 3-D,” Amobi said. “It’s hard not to get optimistic given all of the trends we’re seeing out there.”

DreamWorks Animation, based in Glendale, was spun off from the privately held live-action studio headed by Steven Spielberg, DreamWorks SKG Inc., in a public stock offering in 2004.

For the full year, net profit rose 6 percent to $151 million, or $1.73 per share, from $142 million, or $1.57 per share a year earlier. Revenue rose 12 percent to $725 million from $650 million.