Comcast is silent about DreamWorks bid, instead touting strong first-quarter earnings
Comcast Corp. declined Wednesday to discuss its negotiations to buy DreamWorks Animation, the studio behind “Shrek†and “Kung Fu Panda.â€
Comcast is in talks to buy the Glendale-based studio, but the deal is not complete, according to a person close to the situation who was not authorized to discuss the matter. Such an acquisition would further diversify Comcast’s NBCUniversal media portfolio at a time when family entertainment and animation franchises are particularly valuable.
“Comcast is, no doubt, attracted as much by DreamWorks’ library and intellectual property as by what they might do next,†prominent cable analyst Craig Moffett wrote in a report Wednesday. “It is likely the content library and characters that appeal.â€
In reporting results Wednesday, Comcast executives stuck to their script, touting strong first-quarter earnings, including in the company’s core cable television and Internet services business. The NBCUniversal media unit continues to pay dividends for Comcast.
For the January through March quarter, Comcast’s revenue was up 5.3% to $18.8 billion. Profit reached $2.13 billion, or 87 cents a share, compared to $2.06 billion, or 81 cents a share, in the year-earlier period.
Comcast added a net 269,000 customers in the first quarter, including 53,000 new cable TV subscribers -- defying the cord-cutting trend.
NBCUniversal revenue was up 3.9% to $6.9 billion for the quarter.
Comcast Chief Executive Brian Roberts underscored the value of NBCUniversal -- and the value of owning content.
For example, he announced that NBC has already notched more than $1 billion in advertising sales for the upcoming Summer Olympics in Brazil. NBC reached the mark faster than in years past, setting the company up for a profitable summer.
“NBC’s coverage itself will be unprecedented,†Roberts said.
The Wall Street Journal first reported that Comcast was planning to acquire DreamWorks Animation for about $3 billion.
The animation studio’s market value Tuesday was $2.35 billion, but news of Comcast’s interest sent DreamWorks shares soaring. Dreamworks shares were up 16% to more than $31 a share in early Wednesday trading.
The potential tie-up would have advantages to both companies.
Since Comcast took over NBCUniversal five years ago, the company has systematically been bolstering key properties, including the NBC broadcast network, the Universal Pictures movie studio and the Universal theme parks, which have witnessed explosive growth through the Harry Potter attractions in Orlando and Los Angeles.
Comcast is planning to build a 300-acre theme park in China, slated to open in 2019. Having the internationally known “Kung Fu Panda,†“How to Train Your Dragon†and “Shrek†characters available to populate theme park attractions could entice more visitors.
In the first quarter, Universal theme park revenue was up 58% to $1 billion, helped by revenue now included from the Universal Studios Japan business. Theme park profit was up nearly 54% to $375 million.
Comcast, meanwhile, clearly recognizes the value of animation. Its Universal Pictures unit has been building its animation business with Illumination Entertainment, which produced a big hit last year in the “Despicable Me†spinoff “Minions.â€
The “Despicable Me†movies have been among the most profitable films ever for the century-old studio. Universal Pictures’ revenue was down 4.3% to $1.38 billion, suffering from tough comparisons to 2015, when “Fifty Shades of Grey†was charming moviegoers.
Film profit was down 43% to $167 million.
A combination with DreamWorks could give NBCUniversal further inroads in China, where DreamWorks boss Jeffrey Katzenberg has built a substantial presence.
“In China, it is amazing how far we’ve come in the last few years,†NBCUniversal Chief Executive Steve Burke said during the earnings call, noting that a couple if years ago, NBCUniversal had only a handful of executives working in the spawling Asian country. Now it has a robust team.
“China represents a big, big opportunity for the company,†Burke said. “As that market grows, it is important for us to be there and I want to make sure we are doing everything we can to grow that business as fast as we can.â€
A union also could help Comcast rapidly expand its consumer products businesses, an area that NBCUniversal only recently began to carve out with the pill-shaped “Minions†and the dinosaurs of “Jurassic World.â€
DreamWorks has produced several juggernaut film franchises but has struggled to thrive as a standalone animation studio because it is not part of a large, diversified media company, and unable to easily absorb losses when costly movies misfire at the box office.
Representatives of DreamWorks Animation declined comment Tuesday.
Twitter: @MegJamesLAT
Staff writer Ryan Faughnder contributed to this report.
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