DreamWorks DVD boost profits

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There's some good news for DreamWorks Animation's bottom line. The studio reported that they made $93.7 million in the first three months of 2007. That's a 56% improvement from the same time last year, when the studio made $60.1 million.

The Glendale-based studio also made a net income of $15.4 million (15 cents per share on a fully diluted basis). That's up 25% from $12.3 million (12 cents per share) from the same period in 2006.

"In what was a relatively quiet quarter, our library of titles continued to perform well especially in the home video market, with Over the Hedge performing even better than we had expected," said DreamWorks Animation CEO Jeffrey Katzenberg.

Over the Hedge's DVD sales were the big contributor to DreamWorks' fortunes. The animated film about a group of animals trying to adapt to suburbia made $33.1 million in home video sales. DreamWorks shipped 12.6 million units during the period beginning January 1st, and ending March 31st.

Another hot seller was DreamWorks' 2005 collaboration with Aardman Animation, Wallace and Gromit in the Curse of the Were-Rabbit. That flick added another $9.4 million to DreamWorks' coffers, driven by DVD sales and Pay TV. The company shipped 5.8 million Curse of the Were-Rabbit DVD's during the first quarter.

Madagascar, another 2005 flick, sold $6.4 million worth of DVD's during that same time period.

The only dark spot on the horizon was Flushed Away. Despite pulling $176 million in worldwide box office, the flick still hasn't recouped its costs. It added $1.2 million in sales, mostly driven by merch and licensing. Since it came out on DVD February 20th, it hasn't made much of an impact on first quarter earnings. So far, DreamWorks has shipped 3.2 million Flushed Away DVD's.

Overall, DVD sales have been declining over the past year. This means that, in order to be successful, a movie has to recoup its costs at the box office. And considering the quick turn-around in theatres, these days, that profit has to come within the movie's first month at the box office.

Sales costs for the first quarter of 2007 were around $53.5 million, while SG&A added up to $25.8 million, including $9.6 million of a stock compensation expense.

"This is an exciting time for all of us at DreamWorks Animation," Katzenberg continued. "With two strong films (Shrek the Third and Bee Movie) set to be released in 2007, we are all hopeful that this is the start of a great year for our company and its shareholders."

Shrek the Third looks to be DreamWorks' big moneymaker for 2007. That movie comes out May 18th, sandwiched between two hotly anticipated live-action flicks: Spider-Man 3 and Pirates of the Caribbean: At World's End.

"From a creative standpoint, Shrek the Third delivers as the next chapter of one of the most successful movie franchises of all times," Katzenberg enthused. "With several other blockbusters opening within weeks of each other, this May has the potential to be one of the biggest of all time, and we are looking forward to seeing how it all plays out."

Bee Movie, which was written by and starring Jerry Seinfeld, will not be a huge factor in DreamWorks' 2007 revenues since it only hits theatres November 2nd.

In 2008, DreamWorks Animation will release Madagascar 2: The Crate Escape and Kung Fu Panda.

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