EXCLUSIVE: The studio’s new unit called Paramount Animation will start producing one toon a year in 2014 and beyond. The studio will launch immediately a search for the top executive who will report to Paramount Motion Picture Group President Adam Goodman. There’s no word yet if Gore Verbinski’s recent Rango will have a sequel, but if it does it would be produced under this new banner. But what does this mean for Paramount’s distribution relationship with DreamWorks Animation which ends on December 31st of 2012? “We did offer them a one-year extension on the same terms of what we have,” a Paramount exec tells me.
“But Jeffrey has indicated his desire to get a better deal. And so for us long term, it only makes sense if it’s improved beyond that. Given everything else that we have going on, it’s the only thing that makes sense for us.” Word is from folks whom Katzenberg has approached that he’s interested in a sale as part of a new distribution deal. And I’ve learned that his current energies are focused on Time Warner after being turned down by Comcast (DWA & Comcast: Who’s Pursuing Whom?), Disney, Universal, Fox, and Sony which all have their own animation units.
Exactly a year ago at 2010’s Camp Allen investment conference, Comcast quashed rumors spread by Katzenberg that the new owners of NBCUniversal supposedly wanted to buy DreamWorks Animation and make him head of NBCU. Comcast’s Brian Roberts and Steve Burke mentioned to several power players that Katzenberg has been pursuing them to buy DreamWorks Animation and lobbying them to make him head of NBCU. (Burke, the son of former Capital Cities/ABC president and icon Dan Burke, spent a dozen years in key Walt Disney Co positions but never got along with Katzenberg. Besides, NBCU has Illumination Entertainment.) At that time, Jeffrey already had offered up DWA to every Hollywood studio, but they and their parent companies had passed. Before Comcast, the most recent “no” had come from Time Warner’s Jeff Bewkes. But now it sounds as if Katzenberg is trying there again.
Lackluster sales of 3D tickets for DreamWorks Animation’s Kung Fu Panda 2 seemed to confirm that audiences are fed up with the higher ticket prices. Then again, it was Katzenberg who went around convincing those exhibitors to raise their prices before DWA got into the 3D biz. Now investors appear to be disenchanted with DreamWorks Animation, which is making all of its films in 3D. Its shares have been down nearly 20% vs this time last year.
UPDATE: Here’s the Paramount Animation release:
(Los Angeles, CA – July 6, 2011) — Paramount Pictures, a unit of Viacom Inc. (NYSE:VIA and VIA.B), will launch an in-house animation division, with its first title slated for release in 2014. In making the announcement, Paramount Chairman & CEO Brad Grey said the initiative was part of the studio’s long-term strategy for growth and that the new division, Paramount Animation, will focus on high quality animation with budgets per picture of up to $100 million.
Paramount Animation’s mandate will be the development of the broadest range of family CGI animated films, with a key piece being titles under the label of Viacom’s Nickelodeon, the number one entertainment brand for kids worldwide. Paramount will also look to build on Viacom’s already thriving global consumer products business by seeking to capitalize on merchandising opportunities tied to all Paramount Animation releases.
The division will be part of the Paramount Motion Picture Group, reporting to the group’s president, Adam Goodman, and will initially target one release per year. Vice Chair Rob Moore, COO Frederick Huntsberry and Goodman are now conducting a search for the leader of the division.
“We’ve come a long way over the last six years,” said Grey. “Our team has worked hard to build best in class production, marketing and distribution divisions which have proven they consistently execute at the highest level across all genres and price points. Establishing an in-house animation division was the logical next step for us.”
“The marketplace has never offered as many opportunities to create wonderfully imaginative pictures at very appealing budget levels, so we feel this is a perfect moment to launch this effort. We are now eager to expand in animation with appropriate and prudent overhead and production budgets in a way that will allow us to be nimble, creative and innovative,” added Grey. “Paramount also has the distinct advantage of being part of the Viacom family, giving us the ability to leverage its portfolio of powerful and youthful brands to create and market great films and consumer products.”
While Paramount has released an array of successful animated films in its history, the company’s first fully owned CGI animated property was Rango, released to great acclaim in March 2011. The Western, directed by Gore Verbinski and featuring the voice of Johnny Depp in the title role, has grossed over $240 million worldwide and is the best reviewed animated movie so far this year.
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