May 19, 2009 / 8:13 PM / 8 years ago

UPDATE 2-DreamWorks CEO sees film costs down, TV revenue up

* TV business to add $40-60 mln to revenue in 2009

* Movie business to see savings in marketing costs

(Adds byline; comments on 3D, TV series, film costs)

By Gina Keating

LOS ANGELES, May 19 (Reuters) - DreamWorks Animation SKG Inc DWA.O Chief Executive Jeffrey Katzenberg expects the company’s television series and specials to boost revenue, and film marketing costs to drop in 2009.

Katzenberg told analysts on Tuesday that DreamWorks sole 2009 film release, “Monsters vs. Aliens,” has grossed $191 million at domestic box offices so far and that DVD sales of “Kung Fu Panda” and “Madagascar: Escape 2 Africa” had “set us up for possible year-over-year earnings growth in 2009.”

DreamWorks is “poised to have our single biggest year ever” in 2010 because of its theatrical release schedule of an unprecedented three feature films, including a sequel to its blockbuster “Shrek” franchise, Katzenberg told the JP Morgan Global Technology, Media and Telecom Conference in Boston.

Katzenberg also announced that kids cable network Nickelodeon, which already airs DreamWorks’ made-for-TV cartoon “The Penguins of Madagascar,” has ordered a pilot based on “Monsters Vs. Aliens.” The network has ordered a second season of “Penguins” and a second series based on “Kung Fu Panda.”

The company is producing several holiday TV specials based on DreamWorks characters for General Electric Co’s (GE.N) NBC network, as well as a show for Time Warner Inc’s (TWX.N) Turner Network Television. That business is expected to add $40 million to $60 million to DreamWorks’ revenue in 2009.

The animation studio saw “significant” marketing savings on “Madagascar 2” and somewhat less on “Monsters Vs. Aliens,” Katzenberg said, adding that movie studios would “see a continued savings” on prints and advertising in 2010.

Although 3D screenings of “Monsters Vs. Aliens” had not commanded the $5 ticket price premium the company advocated because theater owners feared resistance from consumers, surveys showed no “push back” from moviegoers, he said.

The roll-out of 3D screens, while lagging last year’s expectations, could provide a potential 25 percent to 30 percent increase in film margins as soon as the screens are fully deployed, Katzenberg said.

The company expects to screen “Shrek Goes Fourth” on 6,000 to 7,000 screens in North America next year and that “70 percent-plus” of the film’s admissions will be 3D, he said.

He said added costs for 3D films, including per unit prices for 3D glasses and the cost of converting the animated films, would keep declining.

“It’s a buyers’ market and we are a buyer,” he said. “The cost side of our business is trending in a pretty great way.”

DreamWorks shares closed up 3.7 percent, or 90 cents, at $25.40 on Nasdaq. (Reporting by Gina Keating; Editing by Andre Grenon)

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