July 23, 2012 / 1:16 PM / 7 years ago

Exclusive: DreamWorks considers cable channel after library deal

(Reuters) - DreamWorks Animation SKG, the studio behind the “Shrek” films and this summer’s “Madagascar 3: Europe’s Most Wanted,” is contemplating creating its own DreamWorks cable channel after agreeing to buy Classic Media, adding characters such as “Casper the Friendly Ghost,” “Rocky and Bullwinkle,” and “Lassie” to its franchise business.

DreamWorks said it will pay $155 million in cash for the rights-holding company, owned by Boomerang Media Holdings I LLC, a portfolio company of private-equity firm GTCR LLC.

“A channel is one of the many opportunities we see for combining the DreamWorks brand with this extraordinary library of characters,” said Chief Executive Jeffrey Katzenberg in a phone interview. “It could be a domestic cable channel, international, even an Internet channel.”

For DreamWorks, which is discussing a new distribution agreement with studios to replace its expiring agreement with Paramount Pictures, “the opportunity for a deal has just gone up significantly with the value this adds,” said Katzenberg, who would not discuss any talks he is having.

When the deal closes, DreamWorks would get rights to over 450 titles and more than 6,500 animated and live action episodes that have been distributed in over 170 international markets, the company said in a press release.

Among the characters are “Richie Rich,” “The Lone Ranger,” “Lassie” as well as the Christmas classics “Frosty the Snowman” and “Rudolph the Red Nosed Reindeer.”

DreamWorks does not intend to use the characters to start a business to make live-action movies, Katzenberg said, and would license those rights to other studios as it continues to make animated films.

The DreamWorks CEO likened the expanded list of characters under his company’s control of Marvel, a unit of Walt Disney, that has aggressively mined its characters for films and TV shows and recently made the blockbuster movie “The Avengers.”

Classic Media and Jay Ward Productions — a television cartoon producer founded by American animator Jay Ward — jointly manage the rights to Ward’s catalog, which also includes “Veggie Tales” and Mr. Peabody & Sherman”.

DreamWorks Animation’s 3D feature film Mr. Peabody & Sherman is scheduled for release in December 2013.

“Classic Media brings a large and diverse collection of characters and branded assets that is extremely complementary to DreamWorks Animation’s franchise business,” DreamWorks’ CEO Jeffrey Katzenberg said in the press release.

“We plan to leverage it across our motion picture, television, home entertainment, consumer products, digital, theme park and live entertainment channels.”

Classic Media reported net revenue of $82.2 million and an operating profit of $19.2 million for the 12 months ended February 29.

DreamWorks will finance the deal through a combination of cash and credit, and said it expects it to add to earnings in the first full year after the acquisition is completed.

Reporting by Ronald Grover in Los Angeles and Sayantani Ghosh in Bangalore; Editing by Sreejiraj Eluvangal, Bernard Orr

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