DreamWorks posts bigger-than-expected loss as spending rises
CALIFORNIA – Hollywood studio DreamWorks Animation SKG Inc reported a bigger-than-expected quarterly loss as the company spends heavily on restructuring and diversifying its business.
The company’s selling and administrative expenses jumped 87 percent in the first quarter, mainly due to costs related to expansion of its AwesomenessTV business and marketing of a new television series.
Shares of DreamWorks, known for film franchises such as “Shrek”, “Madagascar” and “Kung Fu Panda”, fell about 5 percent to $24.70 in light extended trading on Thursday.
DreamWorks has been trying to diversify its business as it faces fierce competition from other studios such as Universal Pictures, the maker of “Despicable Me” series, and Warner Bros, the producer of “The Lego Movie”.
The company’s unit AwesomenessTV, a channel targeted at teens and young adults, inked a deal on Tuesday with Google Inc’s YouTube to release feature films over the next two years. The first film under the deal is expected this fall.
DreamWorks, however, reported higher-than-expected revenue for the quarter ended March 31, helped by the successful release of “Home”, its only film this year, and revenue from its “How to Train Your Dragon” franchise.
“Home”, starring singer Rihanna and Emmy-award winning actor Jim Parsons, had one of the best openings for an original movie made by DreamWorks, pulling in $54 million in its opening weekend.
The film had grossed about $308 million worldwide as of April 30, DreamWorks said on Thursday.
Net loss attributable to DreamWorks widened to $54.8 million, or 64 cents per share, from $42.9 million, or 51 cents per share, a year earlier.
Revenue rose 13 percent to $166.5 million.
Analysts on average had expected a loss of 45 cents per share and revenue of $164.5 million, according to Thomson Reuters I/B/E/S.
DreamWorks took a pretax charge of $31.9 million related to job cuts, closure of its Redwood City studio in California and reduction in its annual movie slate to two from thre – REUTERS