Jeffrey Katzenberg is in a box.
His company, DreamWorks Animation, is too small to qualify as a major studio, but too big to be bought by all but a few media players.
His visions are as grand as ever, but his opportunities to fulfill them are limited. With no obvious buyer for his studio and no ability to significantly ramp up production beyond two or three films a year, Hollywood’s most ambitious mogul is stuck.
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“Katzenberg started this business hoping to create a Disney,” Michael Pachter, an analyst with Wedbush Morgan Securities, told TheWrap, referring to DreamWorks. “It’s 10 years later, and it’s not quite Disney yet.”
It's not even Pixar.
Add to that DreamWorks Animation’s stock woes. With everything riding on the opening of the two to three films that the studio releases a year, a soft premiere sends the public company’s share price (DWA) into a tailspin.
That happened again for the latest release, “Kung Fu Panda 2.” The stock took a 9 percent hit over two days, and over time the slide has been notable. DreamWorks stock was trading at a high of $37 per share in October, and closed at just $21 last Friday.
Also read: 'Kung Fu Panda 2' Opening Tanks DreamWorks & RealD Stock
That most DreamWorks films go on to make north of $300 million globally is almost incidental. Each one is so costly and time-consuming to produce that investors expect blockbusters every time Katzenberg and company swing the bat.
“The real reason the stock goes up and down is that revenues are flat, earnings are flat, and the company only makes around two bucks a share,” said Pachter.
The studio’s doldrums have left Katzenberg looking for fresh ways to exploit his “Kung Fu Panda” and “Shrek” films. He has told close associates that he is looking to launch a television network to rival Nickelodeon, according to one such knowledgeable person.
And having just joined the board of the social gaming zenith, Zynga, Katzenberg may well have a thought about leveraging his content for that growing space.
A spokesperson for DreamWorks Animation said the company has no current plans to launch a network, and declined to comment further for this article.
Part of the issue is not Katzenberg’s problem alone. Traditional media companies have fallen out of favor on Wall Street.
“They are in the business of trying to create brands and monetize them the best way they can, but if they expand into gaming or cruise lines, no initiative will move the needle enough,” Tony Wible, an analyst with Janney Montgomery Scott, told TheWrap.
Also read: Trouble at Paramount: Marvel Leaves & Katzenberg's Restless
But DreamWorks also has lost the cachet of being unique in its category, with the advent of Chris Meledandri’s Illumination Entertainment and other talented rivals -- not to mention the uber-leader Pixar.
