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Dreamworks Animations’ restructuring plans continue to hurt the studio’s profits.
The company reported Tuesday that it lost 13 cents per share on an adjusted basis during the second quarter. But including a $20.9 million cost associated with the studio’s restructuring, DWA lost 45 cents per share, compared with a loss of 18 cents per share in the same period last year. That’s a much wider loss than the 26 cents per share that analysts polled by Thomson Reuters had been anticipating.
Revenue for the quarter was up 39 percent year-over-year to $170.8 million, beating expectations thanks to the strong box office performance of Home. Wall Street expected $167 million in quarterly revenue.
“I’m pleased with our progress through the first half of the year,” CEO Jeffrey Katzenberg said during a conference call with investors, though he noted at the top of the call that there’s still a lot of work to be done.
That includes work in the consumer products category, which saw revenue decrease from $18.5 million in the second quarter last year to $12.7 million this quarter. Katzenberg said on the call that the consumer products category will not meet the full-year guidance laid out earlier this year, noting that consumer products have been “a little bit of a moving target” for DWA and fallen shorter than originally expected due to timing. He noted that there are strong are opportunities to grow the category around DWA’s growing slate of originals for Netflix and the theatrical release of Trolls next year.
Despite the surprise box office performance of Home, which grossed $177 million domestically and $207 million overseas, DWA’s financials continue to be impacted by costs associated with a company restructuring that Katzenberg first announced in January. As part of that plan, the studio planned 500 layoffs, will scale back its movie output next year and sold its Glendale campus for $215 million.
Home, which was released on March 27 and became the biggest original hit since Croods, has proved a moneymaker for DWA in the second quarter, bringing in $23.9 million in revenue in the feature film category. The title, about an alien and young girl who become friends, has sold the most digital downloads and had the highest digital conversion of any title during its initial home release period.
Total revenue in the film segment was $87.8 million, up from $69.7 million in the same period last year. The studio will release no new titles until the 2016 premieres of Kung Fu Panda 3, which will be released January 29 in China, and Trolls.
The studio reported that revenue in the television series and specials segment rose from $20 million last year to $54.5 million this year, driven by more episodes delivered through its licensing agreements including the large output deal it has with Netflix. The studio’s first original television property, Dinotrux, premieres on August 14.
When asked about whether DWA will re-up its deal with Netflix, which expires in 2017, Katzenberg said it’s too early to say. “We have had and continue to have an outstanding relationship with Netflix,” he said. “We are actively pursuing the future of that relationship to the degree it suits their needs.”
The new media segment, which includes the AwesomenessTV business that it acquired in 2013, had revenues of $14.6 million, more than double last year’s revenue. Katzenberg noted that the licensing and advertising sponsorship side of the business is where the real growth lies, highlighting the premiere of Smosh: The Movie, which ATV produced together with Defy Media. The film hit No. 2 on the iTunes movie chart despite its untraditional release.
DWA shares, which closed flat for the day at $23.99, were also flat during after-hours trading on the Nasdaq.
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