NBCUniversal, part of Comcast Corp., is buying DreamWorks Animation, the film company behind the Shrek, Madagascar and Kung Fu Panda franchises, for approximately $3.8 billion, strengthening its presence in the important and growing business of children’s entertainment.
It’s a deal that will grow NBCUniversal, which owns the Hialeah-based Telemundo network and Universal theme parks in Orlando, into an even bigger media player.
Jeffrey Katzenberg, the Hollywood mogul whose name has been synonymous with DreamWorks Animation, will step down as chief executive after the sale.
DreamWorks will become part of the Universal Filmed Entertainment Group, which includes Universal Pictures. The studio has churned out hit animated movies through its Illumination label, including the Minions sequel and it has some Dr. Seuss projects in the works such as How the Grinch Stole Christmas.
DreamWorks stockholders will receive $41 for each share they own. That’s a 24 percent premium to the company’s Wednesday closing price of $32.20. The companies put the deal’s value at about $3.8 billion.
Comcast, the nation’s largest cable company, said the deal gives NBCUniversal a “broader reach to a host of new audiences in the highly competitive kids and family entertainment space, in both TV and film.” In addition to the cartoon franchises, DreamWorks also owns what Comcast called a “thriving TV operation” with its AwesomenessTV network of online video creators and a lengthy contract to create shows for Netflix.
The purchase means greater competition for the Walt Disney Co., the world’s largest entertainment company. NBCUniversal plans to use DreamWorks Animation properties to bolster its fast-growing theme parks and move deeper into toys and children’s television.
Katzenberg, is expected to reap nearly $400 million from the deal, will become a consultant to NBCUniversal and serve as chairman of a new entity called DreamWorks New Media.
Stephen B. Burke, NBCUniversal’s chief executive and senior vice president of Comcast, in a statement cited DreamWorks Animation’s “dynamic film brand and deep library of intellectual property” as reasons for the deal. “DreamWorks will help us grow our film, television, theme parks and consumer products businesses for years to come.”
Burke said Chris Meledandri, the chief executive of Illumination, Universal’s animation division, would oversee the DreamWorks Animation business. Katzenberg’s new entity will be made up of assets like AwesomenessTV, a digital network and studio aimed primarily at teenage girls.
The end of the road for DreamWorks Animation as an independent company reflects an increasingly consolidated Hollywood. To survive, companies have come to rely on interconnected, franchise-oriented businesses – with television, consumer products and theme parks typically more lucrative than film. Katzenberg’s company, which has tried mightily to diversify away from movies, was ultimately unable to grow fast enough to survive alone.
For Comcast, the deal comes about a year after its $45.2 billion takeover of Time Warner Cable collapsed under regulatory pressure. The new deal, while significant, is relatively small the cable and entertainment giant. It is about one-twelfth the size of Comcast’s failed bid for Time Warner Cable.
Comcast said that the takeover was subject to an antitrust review by the Department of Justice or the Federal Trade Commission but that it does not require approval by the Federal Communications Commission. The company expects the transaction to close by the end of 2016.
This report was supplemented by material from the Los Angeles Times, the New York Times and the Associated Press.
COMCAST AT A GLANCE
With DreamWorks Animation, Comcast adds several movie franchises – among them, Shrek, Madagascar and Kung Fu Panda – to its growing entertainment empire.
Though the bulk of its business remains in cable TV services, Comcast also has television channels and theme parks, mostly through its purchase of NBCUniversal from General Electric.
Here’s a look at Comcast’s various businesses:
▪ Cable services: Comcast got its start providing cable TV services and grew to be the nation’s largest cable provider, though it trails AT&T in overall TV subscribers following the phone company’s purchase of satellite provider DirecTV last year. Comcast’s cable services, which include high-speed Internet and phone services, generate about two-thirds of the company’s revenue and income. It has more than 22 million TV customers.
▪ Television: Comcast owns the NBC and Telemundo broadcast networks and operates 27 local TV stations. The company also owns such cable channels as CNBC, MSNBC, USA, Syfy, E! and Bravo. Sports networks include NBC Sports Network, Golf Channel and a few regional networks that cover hometown teams.
▪ Movies: Even without DreamWorks Animation, Comcast already has a large TV and movie production business. It owns the Universal Pictures, Illumination and Focus Features studio brands. Major Universal franchises include “Jurassic Park,” “Despicable Me,” “Fast & Furious” and the Jason Bourne films.
▪ Theme parks: Comcast owns Universal theme parks in Florida and California and the Wet ‘n Wild water park in Orlando. It has a majority stake in Universal Studios Japan and plans to open a theme park in Beijing. The theme parks include rides devoted to Harry Potter under license from rival studio Warner Bros.
▪ Online: Comcast has a hodgepodge of Internet businesses. Comcast bought the movie ticketing business Fandango in 2007 and bought the M-Go online movie service this year – from a joint venture that included DreamWorks Animation. M-Go is now FandangoNow. Through Fandango, Comcast is getting movie rating services Flixster and Rotten Tomatoes from Warner Bros. Meanwhile, the DreamWorks deal gives Comcast a controlling interest in AwesomenessTV, an online video service that targets younger viewers.
▪ Sports: Through Comcast Spectacor, the Philadelphia-based company owns the Flyers hockey team and the Wells Fargo Center arena in Philadelphia.