REUTERS - Movie studio DreamWorks Animation SKG Inc DWA.O reported its first quarterly loss in almost six years as it wrote down $165 million related to the weak box office performance of “Rise of the Guardians” and its decision to delay another film.
The company also said it plans to cut jobs as it seeks to “meaningfully” reduce costs. About 350 employees will leave over the course of the year as part of a restructuring, Chief Financial Officer Lew Coleman told analysts on a conference call. Most will be in production groups, he said.
DreamWorks shares, which have fallen about 7 percent in the last three months, were down 3 percent in after-market trading on Tuesday. They closed at $16.61 on the Nasdaq.
The animation studio behind the hugely successful “Shrek” and “Kung Fu Panda” franchises had hoped its fourth quarter would be driven by strong performance of the “Rise of the Guardians” from Thanksgiving to the Christmas holidays.
DreamWorks said it wrote down about $87 million in costs related to the “Guardians” movie, an animated adventure fantasy featuring the voices of Alec Baldwin, Hugh Jackman and Jude Law.
“They have a history of making successful films, and they’ve had one flop ... This movie was a bust, but based on their track record, I expect things to get better,” Morningstar analyst Michael Corty said.
Based on William Joyce’s “The Guardians of Childhood” book series, the film tracks the adventures of a carefree boy.
The film, which released in November, grossed $302.3 million at the worldwide box office. It contributed only 2 percent to DreamWorks’ total revenue in the fourth quarter. The movie cost roughly $145 million to produce, according to the Box Office Mojo website, plus tens of millions more to market. The studio shares box office revenue with theater owners.
“While Rise of the Guardians did not achieve the level of box office success that we have come to expect from a DreamWorks Animation film, we have made several changes to our future slate,” Chief Executive Jeffrey Katzenberg said in a statement.
The “Guardians” film was the last distributed by Paramount for DreamWorks. The studio’s films will now be distributed by News Corp’s (NWSA.O) Fox studio.
‘ME & MY SHADOW’ SHELVED
The company said on Tuesday that it took a $54 million charge as it stopped production work on “Me & My Shadow,” an animated 3D fantasy film about a shadow taking control of its owner. The movie “is not where it needs to be at this stage of production,” Katzenberg said on the call with analysts.
DreamWorks did not provide any future schedule for the film.
It also shifted the release date of “Mr. Peabody and Sherman” to March 2014 from November this year. DreamWorks said Fox advised the delay as it had huge success with another animated children’s franchise, “Ice Age,” in the month of March.
DreamWorks’ next film, “The Croods,” is slated to release on March 22. The comedy adventure tracks a prehistoric family on a road trip and features voices of Nicholas Cage and Ryan Reynolds, among others.
The company said its full-year 2013 results are expected to be driven primarily by the performance of “The Croods,” and “Turbo,” which is scheduled to release on July 19.
“The majority of these films’ profit will not occur until the second half of the year, specifically in the fourth quarter,” Coleman said.
The continued success of “Madagascar 3: Europe’s Most Wanted,” primarily from home entertainment and international box office, contributed about 36 percent to fourth-quarter revenue.
The net loss was $82.7 million, or 98 cents per share, in the fourth quarter, compared with a profit of $24.3 million, or 29 cents per share, a year earlier.
Revenue at the company, which competes with Walt Disney Co’s (DIS.N) Pixar, among others, rose 21 percent to $264.7 million.
Analysts had expected revenue of $216 million, according to Thomson Reuters I/B/E/S.
Reporting by Chandni Doulatramani in Bangalore and Lisa Richwine in Los Angeles; Editing by Saumyadeb Chakrabarty and Prudence Crowther