February 23, 2016 / 9:15 PM / 3 years ago

'Home' run, licensing fees power DreamWorks blockbuster show

(Reuters) - Hollywood studio DreamWorks Animation SKG Inc reported better-than-expected quarterly revenue and profit, helped by the worldwide television release of its movie “Home” and higher licensing fees.

Actors Steve Martin (2nd R) and Jim Parsons (R) perform the voices for the upcoming animated movie 'Home', at DreamWorks Animation in Glendale, California, in this November 26, 2013, file photo. REUTERS/Jason Reed/Files

Shares of the company, which produced the popular “Shrek” and “Kung Fu Panda” movies, rose 9.2 percent to $23 in after-hours trading on Tuesday.

DreamWorks has been reducing its dependence on the volatile feature films business to concentrate on increasing revenue from licensing its original content to media houses and video streaming companies such as Netflix Inc and Verizon Communications Inc’s Go90.

Revenue from its high-margin television series and specials business more than doubled to $104.9 million in the fourth quarter ended Dec. 31, as the company delivered more episodes under its episodic content licensing arrangements.

The company last month expanded its deal with Netflix to include streaming rights for newer animated series such as “Trollhunters”, where a group of students investigate a series of mysterious bear killings.

“DreamWorks has contractual commitments for over 1,600 episodes of original animated TV content across linear and SVOD (subscription video on demand) platforms in more than 130 countries around the globe,” Chief Executive Jeffrey Katzenberg said on a conference call with analysts.

The company said it expects television segment revenue to be $275 million-$300 million in 2016, higher than the $228.1 million in 2015.

DreamWorks is betting on fewer movies with stronger plots as well as sequels to fend off stiff competition from Comcast Corp’s Universal Pictures and Time Warner Inc’s Warner Bros.

The company said last year that it would produce two feature films per year, instead of three, starting 2016.

Revenue from its feature film business rose 11.5 percent to $146.4 million in the three months ended Dec. 31, helped by “Home” worldwide television release and continuing DVD sales.

“Kung Fu Panda 3” — the latest in the studio’s “Kung Fu Panda” franchise — has grossed $118 million at the U.S. box office since its release on Jan. 29.

The film has also generated more than $144 million at the Chinese box office, the company said on the call.

Net income attributable to DreamWorks was $42.1 million, or 48 cents per share, in the quarter, compared with a loss of $263.2 million, or $3.08 per share, a year earlier.

Excluding items, the company earned 55 cents per share, racing past the average analyst expectation of 16 cents.

Revenue surged 36.3 percent to $319.3 million, above estimates of $274 million, according to Thomson Reuters I/B/E/S.

Reporting by Kshitiz Goliya in Bengaluru; Editing by Sriraj Kalluvila

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