Katzenberg's Next Act: Digital Media Kingpin?
The DreamWorks Animation founder could find himself building out Awesomeness TV once the NBC Universal acquisition is complete. Some even speculate he might buy back the digital property and go it alone.
With news of a DreamWorks Animation sale to NBCUniversal swirling in the past 24 hours, a veteran animator pondering the future of CEO Jeffrey Katzenberg wrote on Facebook, "Jeffrey might be pulling a George Lucas. He is 66" — actually, 65 — "[and] maybe his car accident got him thinking of quality of life." (That’s the crash last October which has necessitated multiple surgeries and will require Katzenberg to wear a cast for months.)
Or maybe not. “You know Jeffrey,” says a top studio executive who has worked with Katzenberg. “He’s not going to sit still."
Katzenberg will be stepping down as head of DWA when NBC Universal closes its $3.8 billion acquisition. For now, he will take on a new title as chairman of DreamWorks New Media, a division that will comprise YouTube network AwesomenessTV and image visualization startup NOVA. But sources believe that DreamWorks New Media will be spun off or sold, giving Katzenberg a new base of operations. Verizon, which already owns a 24.5 percent stake in Awesomeness, is seen as a potential buyer, or Katzenberg could raise capital from elsewhere.
A Verizon spokeswoman declined to comment, as did Katzenberg. Universal Filmed Entertainment Group chairman Jeff Shell tells THR, "Jeffrey’s going to continue to be involved in Awesomeness and NOVA, which are both partnerships, and I think that’s great. I don’t think we've made any decisions to sell anything."
But a Katzenberg associate is among many who believe NBC Universal parent Comcast has no desire to have Katzenberg in the fold, while Katzenberg has no interest in working for anyone other than himself. That would seem to point to a digital future. “When you take a force as powerful as Jeffrey and you put him in the world of new media, that could be interesting," the associate says. "He has energy, he has brains, he is entrepreneurial and he has the will. ... He’s run studios since he was a kid. He’s got more money than he’ll ever need. Why stay in the old school?”
Katzenberg will pocket $430 million when the sale of DWA is concluded, and the fast-growing AwesomenessTV is a foundation on which he could build a digital-media powerhouse. Katzenberg has been an ardent believer in the Awesomeness business since he acquired the company in 2013, paying just $33 million (plus performance incentives) for the tween-centric digital firm, now valued at $690 million.
“It’s the poster child of a digital-first company that’s been highly successful,” says Manatt Digital Media CEO Peter Csathy. “That’s the playbook you want to follow.”
Founded in 2012 by Varsity Blues director Brian Robbins, Awesomeness began as a business that rolled up young online stars into a larger network. Even then Robbins, who acted in 1980s sitcom Head of the Class before reinventing himself as executive producer of shows like All That and One Tree Hill, had his eye on a large consumer business. He launched the AwesomenessTV YouTube channel as a home for teen- and tween-skewing sketch-comedy videos and other short-form series.
The company now operates a consumer products business, talent management firm Big Frame, a film division, a publishing imprint and a millennial mom channel. And it has stretched well beyond YouTube with a sketch series for Nickelodeon, a Richie Rich adaptation for Netflix, teen movie Dance Camp for YouTube Red and SXSW film Shovel Buddies.
Awesomeness’ financials are reported as part of DWA’s new media segment, which in the fourth quarter of last year saw a 41 percent increase in revenue to $32.9 million. Gross profit increased to $20.6 million. The strong quarter was attributed to increased revenue from licensing and distribution of content.
Of course, Katzenberg could try to start a new film company, perhaps with Chinese money, but observers say that's doubtful. Some have speculated that the longtime Democratic campaign donor might angle for an ambassadorship under Hillary Clinton if she wins the presidency. But others say Katzenberg is close to his family in Los Angeles and would be unlikely to pursue such a far-flung post.