DreamWorks Animation Takes $87 Million Charge for 'Rise of the Guardians,' Confirms Layoff Plans
UPDATED: CEO Jeffrey Katzenberg says layoffs will occur this year, primarily within production groups.
DreamWorks Animation said Tuesday it will take an $87 million charge for the poor performance of Rise of the Guardians, a film with a $145 million production budget that has scored just $302 million worldwide since opening in November. The company also will take a charge of $54 million for returning Me & My Shadow to development, a $20 million charge to write off other projects in development and another $4.6 million in restructuring charges.
The studio also reported losing $83 million, or 98 cents per share, in the most recent quarter on revenue of $265 million.
Analysts had expected the company to lose about 3 cents per share in the quarter, reversing a 29-cents-per-share profit a year ago. Revenue was expected to sink to $213 million from $219 million in the same quarter a year earlier.
Last year's DWA releases Madagascar 3: Europe's Most Wanted and Rise of the Guardians did not come close to matching the financial results of its Kung Fu Panda 2 and Puss in Boots in 2011.
DreamWorks Animation has been going through a rough patch, and CEO Jeffrey Katzenberg confirmed that there will be layoffs this year, primarily within production groups. Katzenberg didn't say how many people would lose their jobs, but sources tell The Hollywood Reporter that DWA could lay off up to 400 people at its Glendale-based studio.
Katzenberg, citing something Chicago Mayor Rahm Emanuel said when he was President Barack Obama's White House chief of staff, said the layoffs are an attempt to "take full advantage of every crisis you face." Therefore, he will "right-size the whole enterprise" to make it more lean and profitable.
The company said three weeks ago it was delaying the release of Mr. Peabody & Sherman by four months and that Me & My Shadow has been yanked from the schedule indefinitely. Katzenberg said Tuesday it was at the "strong suggestion" of distribution partner 20th Century Fox that Peabody & Sherman was being delayed to a date less competitive for family releases.
Katzenberg, in fact, said during a conference call with analysts that release dates were of monumental importance nowadays with so many family movies, including live-action films, scheduled in the marketplace.
"We just have to be more flexible and more strategic," he said.
The executive said that while box office for Rise of the Guardians was "certainly a disappointment," he was happy with the entertainment value of the film.
Madagascar 3 accounted for $95.2 million of revenue during the quarter, Puss in Boots was at $10.5 million, Rise of the Guardians came in at $6.1 million, and Kung Fu Panda 2 was good for $4.8 million. Library titles contributed $63.4 million; holiday specials, live-theater productions and other properties accounted for $53.1 million; and Classic Media was good for $31.6 million.
Shares of DreamWorks Animation have declined 6 percent in the past three weeks. On Tuesday, the stock was off 1 percent to $16.61 and an additional 2 percent after the closing bell.