DreamWorks Animation Signs Distribution Deal With Fox

DreamWorks Animation, the studio behind "Kung Fu Panda" and "Shrek," has been looking for a new home since last year

DreamWorks Animation will release its films through 20th Century Fox, the studio said Monday. 

The deal is for five years, and Fox will assist with marketing and distribution both in the international and domestic markets.

“[Fox Co-Chairmen] Jim Gianopulos and Tom Rothman have built a world-class distribution team, and we are excited to apply their expertise, robust infrastructure and global resources so that DreamWorks Animation’s films can reach their fullest possible potential over the next five years," Jeffrey Katzenberg, DreamWorks Animation CEO, said in a statement.

The animation house behind "Kung Fu Panda" and "Shrek" has been looking for a new home since announcing in August 2011 that it was ending its distribution deal with Paramount.

The studio’s board of directors rejected a proposal from Paramount to extend its distribution pact for another year, once its deal expired this year. Its upcoming feature "Rise of the Guardians" will be the final film it releases through Paramount.

Under the terms of the agreement, Fox will receive a distribution fee on worldwide theatrical and home video grosses,  as well as on international television and on certain digital deals.

DreamWorks Animation will retain the rights to distribute its product in the domestic television window without paying a fee to Fox.

Fox did not reveal how its fee will be structured. However, negotiations with Paramount reached an impasse after the studio told DreamWorks Animation that it would only renew its deal if it got paid more than the 8 percent fee it received for its original pact, an individual with knowledge of the situation told TheWrap.

"Starting in 2013, DreamWorks Animation content will be distributed in the more traditional markets under a fee structure that is similar to our existing arrangement with our current distributor,” Katzenberg said in a statement. “However, our new agreement with Fox presents more favorable economics overall for DreamWorks Animation because we are taking advantage of lower costs associated with the emerging digital distribution landscape and managing domestic television distribution in-house.”

To grab DreamWorks Animation, Fox beat out such suitors as Sony. There was also speculation that the studio might self-distribute.

After Paramount launched its own animation division last year, it felt it no longer needed DreamWorks Animations' releases to pad out its schedule.

Fox already owns a successful animation division of its own, anchored by Connecticut-based Blue Sky Studios, which Fox bought in 1997. Fox Animation has produced and distributed the “Ice Age” franchise, which has accounted for more than $2 billion in global box office receipts.

Its other major hit was “Rio,” the Brazil-based toon, featuring the voices of Jesse Eisenberg and Anne Hathaway. A sequel, directed by Blue Sky’s Carlos Saldanha, is slated for 2014.

DreamWorks Animation has launched several franchises since its inception, including “Kung Fu Panda,” “Shrek” and “Madagascar.” Its latest film, “Madagascar 3: Europe’s Most Wanted,” has grossed more than $550 million at the global box office this summer.

Its upcoming projects include ‘The Croods,” “Turbo” and sequels to “How to Train Your Dragon” and “Kung Fu Panda,” which will now fall to Fox.