How DWA and Fox Could Take on Disney

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The five-year marriage puts more money in DreamWorks' pocket and looks to make Fox an animation powerhouse.

The five-year marriage announced Aug. 20 between DreamWorks Animation and 20th Century Fox puts more money in the pocket of the former and looks to make the latter an animation powerhouse.

The worldwide distribution and marketing deal, which begins when DWA's pact with Paramount expires at the end of this year and runs through 2017, allows Jeffrey Katzenberg's company to distribute its product in domestic television windows without paying any fees to Fox. (Fox will take an 8 percent fee in traditional markets, including theatrical, home video and international TV, the same percentage DWA paid Paramount, and 6 percent from digital platforms.) "We are taking advantage of lower costs associated with the emerging digital-distribution landscape and managing domestic television distribution in-house," Katzenberg told reporters Aug. 20.

Meanwhile, Fox chiefs Jim Gianopulos and Tom Rothman will add the DWA product to the slate of movies from its Blue Sky Studios division, which is coming off another global hit with Ice Age: Continental Drift and has Epic and Rio 2 in production. The studio could rival Disney's yearly animation output and even win Hollywood's annual market-share bragging rights. A DWA-Fox cable channel also is a possibility. "For me, in many ways, it's a dream come true," Rothman said.

The additional titles might stretch Fox marketing resources, and the studios could find each other at odds over coveted release dates. But for Katzenberg, who flirted with Sony, the deal ends months of uncertainty about where the publicly traded animation house -- whose 13 films released by Paramount since 2006 have grossed $6.5 billion worldwide -- would wind up.

He can now focus on a slate that includes Turbo, about a garden snail (Ryan Reynolds) with dreams of racing; Me & My Shadow, with the voices of Josh Gad, Kate Hudson and Bill Hader; and Happy Smekday!, with Jim Parsons and Rihanna. Notes analyst Benjamin Mogil: "With the international markets … the key driver in global box office, the choice of Fox is strategically sound."