DreamWorks Animation Profits Down

Despite the success of the hit CG movie, Madagascar, DreamWorks Animation SKG reported a 73% drop in profits for the first quarter of 2006. Revenues total $60.1 million, compared to $167.0 million for the same quarter of 2005. Net income for the toon unit is down from $45.7 million to just $12.3 million, leaving the company with $505.5 million in cash and cash equivalents for the quarter.

The company’s saving grace was the home video performance of Madagascar. Approximately 17.5 million units of the animated comedy shipped through the first part of the year, contributing approximately $30.7 million to quarterly revenues. Meanwhile, international pay television and home video sales for Shark Tale brought in around $13.1 million and library titles accounted for approximately $16.3 million.

DreamWorks Animation notes that distribution costs associated with the releases of Shrek 2 and Wallace and Gromit: The Curse of the Were-Rabbit had not yet been fully recovered. As a result, the company did not recognize any revenue for these films under the pact with former distribution partner DreamWorks Studios.

On May 19, DreamWorks Animation will release its latest 3D romp, Over the Hedge, through its new distribution agreement with Paramount Pictures. The deal, which runs through 2012, saw Jeffrey Katzenberg’s outfit receive a $75 million signing bonus from Paramount. That money was used towards the repayment of a $75 million advance paid by Universal Studios.

An Oscar win for Wallace & Gromit: The Curse of the Were-Rabbit did little to drive home video sales of the Aardman Animations production. The clay-animated film earned a tidy profit overseas but largely failed to catch on with North American audiences at the box office or at retail. The two companies hope their 2007 CG-animated project, Flushed Away, will fare better.

DreamWorks looking to Over the Hedge to drive 2006 profits up with boffo box office and retail receipts. Items related to the company’s first quarter of 2006 were discussed in more detail during a conference call held on Tuesday. Audio from the call can be accessed at www.dreamworksanimation.com.