DreamWorks to release five films every two years

Thu May 28, 2009 12:39pm EDT
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By Gina Keating

LOS ANGELES (Reuters) - DreamWorks Animation SKG Inc will release five feature films every two years, adding an additional film every other year to its existing two picture-a-year release schedule going forward, Chief Executive Jeffrey Katzenberg told investors on Thursday.

The company's slate through 2012 now includes eight feature films, including five original films and three sequels based on its "Shrek", "Madagascar" and "Kung Fu Panda" franchises. All DreamWorks Animation films are available in 3D.

Katzenberg told the Cowen and Co Technology Media and Telecom Conference the animation company has "the resources and bandwidth to support the new films" and would see "significant cost savings on a per film basis."

Lazard Capital Markets analyst Barton Crockett saw the expanded slate as "a positive". Shares of DreamWorks were up 4 cents at $27.20 in early afternoon trading on Nasdaq on Thursday.

"By making more movies, we believe that (DreamWorks) has more chances to produce a new franchise, improving long-term earnings prospects, and increasing (its) strategic value to larger studios, such as its distribution partner, where (it) expects to negotiate better terms after the deal expires in 2012," Crockett, who has a "buy" rating on DreamWorks and a $30 price target, wrote in a note to clients.

Because of a scheduling anomaly, DreamWorks Animation already had three films slated for 2010, and Katzenberg said it expected to see a 5 percent to 10 percent improvement in its typical production costs of $130 million per film plus the $15 million price tag for 3D conversion.

Katzenberg said the company now believes it can produce each of its 2011 films for $130 million including 3D, lowering its costs by more than 10 percent, in part through outsourcing some labor to India.

The company believes the number of major animated film releases from competitors will drop over the next few years, leaving room for more "high end" animation, Katzenberg said.   Continued...

<p>Actor Jack Black (L) and Dreamworks Animation SKG Chief Executive Jeffrey Katzenberg (R) pose on the red carpet at the Australian premiere of Kung Fu Panda in conjunction with the Opening Gala Night of the Sydney Film Festival's Kids' Program at the state Theatre in Sydney June 09, 2008. REUTERS/Patrick Riviere</p>