Q1-16-Televison, Consumer Products, New Media drive up DreamWorks Animation numbers

BENGALURU: DreamWorks Animation SKG Inc., (DWA) reported 14.4 percent year-over-year (y-o-y) growth in revenue for the quarter ended 31 March 2016 (Q-16, current quarter) The company reported revenue of $190.44 million in Q1-16 as compared to $106.17 million in the corresponding year ago quarter. Further, it reported net income attributable to DWA of $13.84 million in the current quarter as compared to a loss of $54.78 million in Q1-15. The growth in revenue was driven by performance in the Television Series and Specials, Consumer Products and New Media segments.

"I am happy to report another strong quarter of financial results, which I believe reflect continued execution on our strategy of transitioning DreamWorks Animation into a global family entertainment company," said DWA CEO Jeffrey Katzenberg, "I'm excited to be passing the baton to Comcast, as I know they will continue to build on the foundation we've established over the past 22 years."

On April 28, 2016 NBCUniversal, a division of Comcast Corporation, announced the acquisition of DreamWorks Animation. The transaction is expected to close by the end of 2016, subject to receipt of regulatory approvals in the U.S. and abroad, as well as the satisfaction of other customary closing conditions. Following the completion of the transaction, DreamWorks Animation CEO and co-founder Jeffrey Katzenberg will become chairman of DreamWorks New Media, which will be comprised of the company’s ownership interests in Awesomeness TV and NOVA.  Katzenberg will also serve as a consultant to NBCUniversal.

Note: Beginning in the quarter ended 31 March 2016, DWA says that it has changed the method by which intellectual property costs are charged to the Consumer Products segment to provide better comparability to peers and to be similar to the method used in the Television Series and Specials segment while minimizing segment volatility. As a result, the Consumer Products segment no longer bears amortization of capitalized production costs for the use of Film and TV segment intellectual property. Instead, the Consumer Products segment is charged a royalty fee which will compensate the originating segment for the use of intellectual property. There is no change to DWA’s consolidated financials, as DWA’s ultimate revenues and the amortization of capitalized production costs remain unchanged. This methodology impacts segment reporting only. All prior-year period figures have been updated to reflect this new methodology, says the compny.

Segment numbers

Feature Films segment

Feature Films segment’s revenues for Q1-16 declined 26.7 percent to $94.3 million, compared to $128.7 million in Q1-15. Revenues in the  current quarter were favourably impacted by the worldwide pay television distribution of How to Train Your Dragon 2 and Mr. Peabody and Sherman, higher home entertainment sales and recoveries of $6.3 million from previously established home entertainment reserves related to sales through DWA's former primary theatrical distributor. Segment gross profit for Q1-16 of $26.1 million was 31.5 percent lower compared to $38.1 million in the prior-year period.

Television Series and Specials segment

Revenues for Q1-16 from the Television Series and Specials segment more than tripled (3.14 times) to $57.0 million, compared to $18.1 million during the corresponding prior-year period. DWA says that the increase in revenues was attributable to a significantly higher number of episodes delivered under its episodic content licensing arrangements. Segment gross profit in the current quarter increased six-fold to $21.1 million from $3.5 million in Q1-15. The increase was primarily driven by higher revenues and lower marketing expenses, says DWA.

Consumer Products segment

Revenues from DWA’s Consumer Products segment increased 50 percent y-o-y in Q1-16 to $21.4 million, compared to $14.3 million in the same period last year. DWA says that the increase was primarily due to revenues earned from location-based entertainment initiatives during the current quarter. Revenue for both the current and prior year quarters also included contributions from merchandise licensing arrangements. Segment gross profit increased 60 percent y-o-y to $15.0 million in the current quarter from $9.4 million in the prior-year period.

New Media segment

Revenues from DWA’s New Media segment more than tripled  (3.3 times) in Q1-16 to $15.2 million compared to $4.6 million during Q1-15. This increase was primarily attributable to revenue generated from licensing and distribution of content and to a lesser extent, brand sponsorship and talent management arrangements says DWA. Segment gross profit for Q1-16 also more than tripled (3.1 times) to $6.5 million from $2.1 million in the prior-year period, primarily due to higher revenues.

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