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DreamWorks Animation takes $87 million write-down on 'Guardians'

February 26, 2013|By Richard Verrier
  • Bunnymund (Hugh Jackman) and North (Alec Baldwin) in DreamWorks Animation's "Rise of the Guardians."
Bunnymund (Hugh Jackman) and North (Alec Baldwin) in DreamWorks Animation's… (DreamWorks Animation )

DreamWorks Animation SKG said it would take an $87-million charge on last year's holiday movie "Rise of the Guardians," marking the largest write-down the studio has ever taken for one of its own movies.

Analysts had estimated that the studio would take a write-down of from $70 million to nearly $100 million on the film, which represented a rare box-office misfire for DreamWorks, creator of the popular "Shrek," "Kung Fu Panda" and "Madagascar" films.

"Rise of the Guardians," which cost about $145 million to make, has generated $302 million in global box-office ticket sales since its debut in late November, well short of a typical DreamWorks Animation movie.

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The film -- about a group of folk heroes, including the Tooth Fairy and Santa Claus, who join forces to protect children from an evil nemesis -- faced tough competition during a record Thanksgiving weekend at the holiday box office, losing business to "Lincoln," "Life of Pi," "Twilight: Breaking Dawn Part 2," "Skyfall" and Disney's animated hit "Wreck-It Ralph."

"While 'Rise of the Guardians' did not achieve the level of box-office success that we have come to expect from a DreamWorks Animation film, we have made several changes to our future slate that we believe will position us well for the next two years,” said Jeffrey Katzenberg, chief executive of DreamWorks Animation. "We are now looking ahead to our next release -- and our first under our new distribution agreement with 20th Century Fox -- 'The Croods' on March 22, 2013.”

"Rise of the Guardians" was the studio's biggest money-loser since 2006's "Flushed Away," co-produced with British-based Aardman Animations. DreamWorks took a $109-million write-down on that movie.

DreamWorks also said it took a fourth-quarter charge of $54 million related to the company's decision to return "Me & My Shadow" back to development, a write-off of a number of other development projects in the amount of $20 million and a charge of $4.6 million related to restructuring activities. The studio has already taken steps to lay off up to 20% of its workforce following the decision to shelve production of "Me and My Shadow."

As part of the changes, DreamWorks shifted the release date for its movie "Mr. Peabody & Sherman" from Nov. 1 to March 7, 2014, at the recommendation of its new distributor, 20th Century Fox.

Removing one of three movies from its slate this year increased pressure on the studio to cut costs to make up for the reduced business.

As a result of the charges, the company reported a net loss of $82.7 million, or $.98 cents a share, in the fourth quarter, on revenues of $264.7 million. For the year, DreamWorks reported total revenue of $749.8 million and a net loss of $36.4 million, or a loss of $0.43 per share.

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