DWA blames low DVD sales for 59% drop in profit

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DreamWorks Animation

Dream­Works Animation

Falling DVD sales and the lack of a new pay-TV offer­ing were rea­sons that Dream­Works Ani­ma­tion SKG Inc. cited Thurs­day for a 59% drop in first-quarter profit.

Net income declined to $8.79 mil­lion (10 cents a share) from $21.7 mil­lion (24 cents) the pre­vi­ous year, the Glen­dale, California-based stu­dio behind the Shrek movies said in a statement.

Sales dropped 33% to $108 mil­lion from $162 mil­lion in the same quar­ter last year, just behind the $109 mil­lion aver­age of 12 ana­lysts’ esti­mates col­lected by Bloomberg.

A decline in DVD sales through out the indus­try has hurt DWA, Michael Pachter, a Los Angeles-based ana­lyst for Wed­bush Secu­ri­ties Inc., said in an inter­view before the results were announced. “The DVD market’s pretty much flooded,” he said, adding that “the stu­dios have trained con­sumers to wait” until prices are lower or rental ser­vices make films available.

Dream­Works is releas­ing How To Train Your Dragon through pay TV this quar­ter, sev­eral months later than expected, Pachter said. Released the­atri­cally on March 26, 2010, the movie con­tributed $8.7 mil­lion of rev­enue in the first quar­ter this year.

Released in the­aters last Novem­ber 5, Mega­mind brought in $18.1 mil­lion of rev­enue in the quar­ter, mostly from domes­tic home video. The film was released into the home enter­tain­ment mar­ket on Feb­ru­ary 25.

Shrek For­ever After, released on May 21, 2010, accounted for $19.9 mil­lion of rev­enue in the quar­ter, mostly from home enter­tain­ment, where it was released on Decem­ber 7.

Kung Fu Panda (2008) con­tributed rev­enue of $12.1 mil­lion; Mada­gas­car: Escape 2 Africa, released the same year, con­tributed $19.1 million.

Mean­while, DWA plans two the­atri­cal releases this year, Kung Fu Panda 2 on May 26 and Puss In Boots on Novem­ber 4. The com­pany said it antic­i­pates that Kung Fu Panda 2 will help drive its second-quarter and full-year results.

The com­pany said that TV rev­enue for Mada­gas­car 2, How to Train Your Dragon and Shrek For­ever After should also con­tribute to second-quarter results.

We now look for­ward to kick-starting the sum­mer moviego­ing sea­son with Kung Fu Panda 2 on May 26, as fam­ily enter­tain­ment — and CG ani­ma­tion in par­tic­u­lar — has per­formed at the top of the box office charts so far this year,” said Dream­Works Ani­ma­tion CEO Jef­frey Katzenberg.

Shares in Dream­Works Ani­ma­tion fell 12 cents to $26.73 in Nas­daq Stock Mar­ket trad­ing at 4 p.m. New York time Thurs­day. Prices remained unchanged in after-hours trading.

The shares traded at between $25.17 and $43.58 over the past year. They have dropped by 9.3% so far this year.

[Via Bloomberg — http://www.bloomberg.com/…-pay-tv-release.html, RTTNews — http://www.rttnews.com/…View.aspx?Id=1606645]

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