Comcast in Talks to Acquire DreamWorks Animation for $3 Billion

It’s unclear whether Jeffrey Katzenberg would play a key role at the company should a deal close

Last Updated: April 27, 2016 @ 9:47 AM

In a deal that could be worth more than $3 billion, Comcast is in talks to acquire DreamWorks Animation.

A spokesman for DreamWorks Animation declined to comment to TheWrap. The Wall Street Journal first reported the talks, confirmed to TheWrap by individuals with knowledge of the talks.

Led by CEO Jeffrey Katzenberg, DreamWorks Animation is behind hit film franchises such as “Shrek,” “Kung Fu Panda” and “How to Train Your Dragon.”

But the animation studio has struggled to find a path to stable growth with a limited release slate and mixed results at the box office. Wall Street has continually punished DreamWorks Animation while Katzenberg has struggled to find the right partner to whom to sell his company.

ComCast would combine DreamWorks with Illumination Entertainment, its animation division led by Chris Meledandri, and almost certainly phase out Katzenberg, an individual with knowledge said.

DreamWorks Animation’s current market value is $2.3 billion, so a sale price of $3 billion would be a coup. The studio has struggled as a standalone entertainment business since it was spun off from DreamWorks SKG as a publicly traded company in 2004. The company was recently forced to cut back its annual number of releases and layoff nearly 20 percent of its staff.

Katzenberg has made a number of attempts in recent years to sell the company to one of the major Hollywood studios, and Hasbro also made a strong play for DWA in late 2014, though it ultimately failed to materialize. Katzenberg recently floated Viacom/Paramount as a potential buyer as well, and had previously held talks with Japan’s Softbank and several Chinese companies.

DWA’s stock has been pummeled due to a limited schedule of animated films in an increasingly crowded market that has made every project a high-risk release. The stock price is currently $27 per share, down from its high of $35 per share in December 2013, and back up from a low of $17 in September of last year.

DreamWorks Animation diversified successfully with the purchase of Awesomeness TV, a leading digital video platform for millennials. Verizon recently bought a minority stake in Awesomeness, valuing the division at $650 million.

DWA’s films are currently released by 20th Century Fox, though that deal is scheduled to expire at the end of 2017. Comcast-owned Universal Pictures already has a successful animation studio in its exclusive distribution deal with Chris Meledrandri’s Illumination Entertainment (“Despicable Me”).

DreamWorks Animation’s next release will be “Trolls,” which Katzenberg hopes will launch a franchise when it hits theaters in November.

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