Comcast is in talks to buy DreamWorks Animation in a multi-billion-dollar deal, The Wall Street Journal and Bloomberg are reporting. USA TODAY
DreamWorks Animation CEO Jeffrey Katzenberg has finally found a new home for Shrek at Comcast-owned NBCUniversal.
NBCUniversal, a division of Comcast, announced its acquisition of DreamWorks Animation on Thursday in a deal valued at about $3.8 billion. DreamWorks Animation stockholders will get $41 for each share of common stock. Comcast expects to close the deal by the end of 2016.
Katzenberg has been seeking a buyer for his studio in recent years — a move that would help it remain competitive against bigger studios, such as Disney and Fox. In the past, SoftBank and Hasbro had expressed interest.
S&P Global Market Intelligence equity analyst Tuna Amobi said the acquisition could be "the richest ever premium for a studio deal," because Comcast paid more than 50% above DreamWorks Animation's closing price in recent days. Amobi also issued "buy" opinions on both companies' stocks in the note to investors Thursday.
When the deal is completed, Katzenberg will step down as CEO of the studio to become chairman of DreamWorks New Media, made up of the company’s ownership interests in video company AwesomenessTV and its tech company, Nova. He will also be a consultant to NBCUniversal.
Katzenberg co-founded DreamWorks in 1994 with Steven Spielberg and David Geffen. DreamWorks Animation spun off as a public company in 2004.
“Having spent the past two decades working together with our team to build DreamWorks Animation into one of the world’s most beloved brands, I am proud to say that NBCUniversal is the perfect home for our company; a home that will embrace the legacy of our storytelling and grow our businesses to their fullest potential,” said Katzenberg in a statement. “This agreement not only delivers significant value for our shareholders, but also supports NBCUniversal’s growing family entertainment business. As for my role, I am incredibly excited to continue exploring the potential of AwesomenessTV, NOVA and other new media opportunities, and can’t wait to get started.”
DWA acquired AwesomenessTV in 2013. Earlier this month, Verizon acquired a 24.5% stake in the Generation Z-oriented online video maker; Hearst has a 25% stake, too.
Comcast will fold the studio into NBCUniversal's Universal Filmed Entertainment Group, which includes Universal Pictures, Fandango, and NBCUniversal Brand Development.
The deal bolsters the cable and Internet provider's already expansive catalog of content from NBCUniversal at a time when pay-TV licensing costs for programming continue to rise. Included in DreamWorks Animation's rich animation library are film franchises such as Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon.
"From consumer products and TV/film to digital media and theme parks, the deal could portend a sizable long-term term upside," Amobi said.
In a filing with the Securities and Exchange Commission, Comcast said that the acquisition would not only strengthen its film animation portfolio, but also "build its consumer products business, expand its theme park attractions, and enhance its position in the kids TV space."
Also in the filing, Comcast valued DreamWorks Animation as a $4.1 billion enterprise, including the assumption of debt.
“DreamWorks Animation is a great addition to NBCUniversal,” said NBCUniversal CEO Steve Burke. “Jeffrey Katzenberg and the DreamWorks organization have created a dynamic film brand and a deep library of intellectual property. DreamWorks will help us grow our film, television, theme parks and consumer products businesses for years to come.”
Follow Mike Snider on Twitter: @MikeSnider