monday, 29 september of 2014

Softbank Discussing Buyout of DreamWorks Animation

Softbank Corp., the Japanese wireless carrier headed by Masayoshi Son, is in talks to buy Jeffrey Katzenberg’s DreamWorks Animation SKG Inc. film studio, people familiar with the situation said.

Softbank has made a $3.4 billion offer that values DreamWorks Animation shares at $32 each, the Hollywood Reporter said yesterday. The board of DreamWorks Animation, based in Glendale, California, held an emergency meeting last week to weigh the bid, the publication reported.

Softbank, which would become the second Japanese company to own a Hollywood film studio, can afford DreamWorks. The company’s investment in Alibaba Group Holding Ltd. has a market value of more than $70 billion. Softbank controls the third-largest U.S. mobile operator, Sprint Corp., and has been looking for more U.S. media investments.

A sale would make DreamWorks Animation part of a much larger company, providing leverage in negotiations with distributors of its movies and TV shows. It would also ease the company’s expansion Asia, where DreamWorks has been expanding and Softbank is already allied with Alibaba, the e-commerce that went public this month.

In 2012, Oriental DreamWorks was formed by DreamWorks Animation and three Chinese media companies, China Media Capital, Shanghai Media Group and Shanghai Alliance Investment. They took a 55 percent stake in the venture, giving DreamWorks Animation 45 percent. The business was set up to produce local-language animation with a team of 150 animators.

Chinese Plans

The U.S. company will co-produce “Kung Fu Panda 3, scheduled for release in 2016, with Oriental DreamWorks.

DreamWorks Oriental also announced a plan to invest more than 20 billion yuan ($3.26 billion) building an entertainment center, called The Dream Center, in Shanghai, to rival New York’s Broadway and London’s West End.

Katzenberg, 63, founded DreamWorks SKG with David Geffen and Steven Spielberg two decades ago, and split the animation unit as a separate, public company in 2004. Geffen and Spielberg, who runs the separate live-action DreamWorks Studios, are investors in DreamWorks Animation.

DreamWorks rose 0.6 percent to $22.36 at the close on Sept. 26, giving the company a market value of $1.89 billion. The shares have declined 37 percent this year amid lackluster box-office performances from films such as ‘‘Turbo” and “Mr. Peabody & Sherman.”

The studio known for its “How to Train Your Dragon” franchise has been forced to take writedowns on some of its films and has committed to reduce the cost of its film making.

 Katzenberg has discussed the offer with Softbank and would stay for five years, the Hollywood Reporter said.

Softbank Plans

Son, 57, laid out a 300-year plan in 2010 that included investing in 5,000 companies by 2040. Even as he forecast that 99.98 percent of companies would cease to exist in their current form over the next 30 years, he vowed that Softbank would survive. Last year he attempted to buy Universal Music Group from France’s Vivendi.

Alibaba has invested in Youku Tudou Inc., operator of China’s biggest online video sites, and in July announced plans for a streaming service with Lions Gate Entertainment Corp. Other Chinese companies, including Fosun Group and DMG Entertainment, have invested in Hollywood films or movie companies.

(Published by Bloomberg - September 28, 2014)

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