When David Porter recently resigned from Wal-Mart Stores Inc. for a newly created position at DreamWorks Animation SKG Inc., it seemed like a coup for the studio.
As one of the top executives in home video and music merchandising for the nation's largest retailer, Porter had intimate knowledge not only of Wal-Mart's inner workings but also of the home video strategies of DreamWorks' Hollywood rivals.
But Porter might not wield the influence that DreamWorks had hoped for. Wal-Mart said Wednesday that Porter would not be allowed to deal directly with the retailer for the next five years to avoid the appearance of favoritism, according to a spokeswoman for the chain.
The retail giant, which accounts for about 40% of all DVD sales in the U.S., doesn't want other studios to think DreamWorks has an unfair advantage because Porter is on its team. Home video is a crucial source of revenue for the studios, often determining whether a movie makes a profit or not.
Wal-Mart's stringent ethics policies prohibit employees from accepting even a bottle of water.
"David will not be doing business with Wal-Mart during the time frame designated in our policy," said Sarah Clark, a spokeswoman for Wal-Mart, in an e-mail Wednesday.
DreamWorks, however, does not handle its own DVD sales but rather distributes its films through a deal with Paramount Pictures. DreamWorks said Porter, who will start his job next week, would not be concentrating solely on retail but would be looking for new outlets for DreamWorks' movies online and on portable devices such as mobile phones.
"David is an important hire for us," DreamWorks Animation spokesman Rich Sullivan said. "He will be focusing on the distribution of our product across all platforms and on how to create the most value for our content."
Neither Porter nor DreamWorks Animation Chief Executive Jeffrey Katzenberg was available for comment.
Even if Porter has nothing to do with Wal-Mart directly, some rival studios are nevertheless concerned. Wal-Mart is the 800-pound gorilla in the home video market and studio executives make annual pilgrimages to the Bentonville, Ark., headquarters to discuss upcoming releases and strategies for increasing home video sales. Porter, who was highly regarded as a savvy retail executive, had been privy to such confidential information as studios' revenues and their promotional partnership deals.
Porter's value to DreamWorks would be in increasing the studio's reach by identifying innovative promotional partners and marketing gimmicks that stores such as Wal-Mart would readily get behind.
DreamWorks Animation had a strong summer with the release of "Shrek the Third," which has grossed $772 million worldwide. That is well below the $919 million of its predecessor, "Shrek 2," but it still is one of the highest-grossing films of the year to date. DreamWorks' library now includes a series of solid hits, including "Madagascar" and the first two "Shreks."
Two years ago, Glendale-based DreamWorks suffered an embarrassing debacle in the home video arena. Although "Shrek 2" was an unquestionable hit in theaters, the home video numbers came in well below the studio's projections. DreamWorks' stock was pummeled.
The company has since become more conservative in its forecasts. Analysts are optimistic about DreamWorks' upcoming slate of movies.
In November, the studio is expecting strong DVD sales for "Shrek the Third." The studio's fall release, "Bee Movie," is highly anticipated and is scheduled to open domestically in theaters Nov. 2.
Times staff writer Abigail Goldman contributed to this report.