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Big Media 3Q Corporate Earnings Roundup: Are CEOs Really Worried About Recession? Or Just Looking For Convenient Excuse?

Three months ago, when Big Media CEOs wrapped up their 2Q earnings, they were still relentlessly upbeat about the business. Any worries about the economy? Not then. But the messages they delivered over the past few weeks, as they discussed 3Q, were different. Although they’re still optimistic — remember, they’re paid to be salesmen — now and then you could hear expressions of concern about where things are headed. It stood out when Viacom CEO Philippe Dauman noted that “ad sales growth will face some headwinds.” Other CEOs who are known for speaking bluntly warned that other shocks may bedevil the business. For example, Dish Network Chairman Charlie Ergen said that his satellite company — and others in pay TV — have to fight harder against rising programming costs because “there’s a limit to the price increases that could be passed on to consumers.” Time Warner Cable CEO Glenn Britt warned that premium channels such as HBO, Showtime and Starz “are clearly impacted by the economy as consumers try to cut back.” Either they’re genuinely worried, or they want a scapegoat to blame for things that are going bad, or may soon do so. Whatever the case, we can expect to hear a lot more about the economy when it’s time for the post-mortem on the all-important 4Q earnings.

As for industry performance matters, parents of movie studios had their usual mixed results to brag about or explain away: Time Warner benefitted from Harry Potter And The Deathly Hallows Part 2. Viacom was up on Transformers: Dark Of The Moon. And News Corp beat its chest about Rise Of The Planet Of The Apes and X-Men: First Class. But Disney’s Cars 2 was no match for last year’s Toy Story 3. Comcast’s Universal Pictures had nothing to compare to last year’s Despicable Me. Lionsgate suffered from Conan The Barbarian and Warrior. And DreamWorks Animation’s Kung Fu Panda 2 didn’t contribute as much in the quarter as Shrek Forever After did in the same period last year.

Over at the TV networks, Comcast’s NBC underperformed the Street’s already modest expectations. Execs at almost all the companies were eager to talk about the cash they expect to collect soon from political ads — as well as their favorite new ATM machines: retransmission consent deals and digital streamers including Amazon, Hulu, and Netflix. Speaking of Netflix, CEO Reed Hastings once again tried to reassure investors that he’s focused on “building back our reputation and brand strength” after his decision in July to slap a 60% price increase on customers who wanted to continue to rent DVDs and stream videos. In 3Q Netflix lost 57.7% of its market value and 800,000 subscribers. And since that customer loss was bigger than projected, Netflix shares continued to fall — they’re now down 67.3% since July 1.

Here are some other themes from the latest earnings reports:

Ad sales: They’s good, but for how long? Most television networks report that scatter prices are comfortably above the upfront market from this past summer. CBS chief Les Moonves says prices in 4Q are up by “mid-teens” on a percentage basis, while Discovery says it sees least high single digit percentages. But Disney’s Bob Iger noted that scatter prices have “slowed slightly these last few weeks.” Kurt Hall of National CineMedia — the leading seller of ads in movie theaters — was far more direct when he spoke to analysts after ratcheting down his company’s financial forecasts. “I’m sure that the broadcast and cable guys are sitting there now counting their lucky stars they got their upfront done before August,” he told analysts. “There’s a lot of uncertainty.” Read More »

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UPDATE: ‘Puss In Boots’ Will Top $33.6M This Weekend, Jeff Katzenberg Predicts

UPDATE, 2:25 PM: DreamWorks Animation shares jumped all over the place in after-hours trading when the company reported its earnings — but settled at -2% as CEO Jeff Katzenberg discussed his expectations and plans. He talked up Puss In Boots, predicting that it will set a record this weekend by generating more than $33.6M at box offices — that’s the previous high for a pre-Halloween release. “Anything beyond that goes into the ‘win’ column,” he says. Much of the revenue will come from sales of high-priced tickets for the 3D version. “Almost every review (of the movie) singled out the quality of the 3D experience,” Katzenberg says. “It’s meaningful.” He provided few details about his recent agreement to offer his films to Netflix instead of HBO in the premium TV window but calls the new arrangement “historic” for DreamWorks as well as “the industry as a whole.” Katzenberg was equally vague about the company’s thoughts about negotiating a new distribution deal to replace the one with Paramount that expires at the end of next year. “We will be considering all our distribution options starting in spring of 2012,” he says adding that he expects to have something in place next summer. Katzenberg says that DreamWorks has paid about $700M in distribution fees for 11 movies that generated $5.5B at worldwide box offices, and $10B from sales in all venues.

Asked about the changes in his employment contract, Lew Coleman … Read More »

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Analyst: ‘Pirates’ Was Hurt By 3D As Consumers Tire Of High Ticket Prices

Analyst Richard Greenfield of Wall Street’s BTIG has long been skeptical of claims by Jeffrey Katzenberg and James Cameron that 3D would do wonders for the movie business. But now Greenfield says that 3D is actually hurting the industry: “U.S. consumers are increasingly rejecting 3D movies,” he said in a report today. Attendance for Disney’s Pirates of Caribbean: On Stranger Tides “would have been higher” this past weekend if half of its screens showed the movie in conventional 2D instead of just a third, he says. The evidence? He notes that about 38% of the $90 million in box-office revenue for the film’s opening weekend came from non-IMAX 3D screens. That’s much lower than the average last year, when 54% of the opening revenues for DreamWorks Animation’s Shrek Forever After, and 57% of the initial sales for the studio’s How To Train Your Dragon, came from non-IMAX 3D screens. Greenfield says that “pricing remains our single biggest concern, especially with so many 3D movies aimed at the family segment.” He figures theaters charged $14.85 a ticket to see Pirates on IMAX 3D, $10.85 for non-IMAX 3D, and $7.60 for 2D. He adds that family films also are hurt by “young children not wanted to wear 3D glasses.” His advice: Hollywood should make fewer 3D films in 2012. “Focus on making consumer-desirable films rather than worrying about the technology,” he says.

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DreamWorks Animation’s 3rd Quarter Boosted By ‘Shrek Forever After’

The film’s international rollout helped lift third quarter results for DreamWorks Animation. The company reported total revenue of $188.9 million and net income of $39.8 million, an increase over the same quarter last year (in which it registered revenue of $135.4 million and net income of $19.6 million). Shrek Forever After, which was released on May 21, contributed $120.4 million of revenue in the quarter, mainly from overseas. In total, it grossed $238 million domestically and $497 internationally, making it the company’s highest ever international performer. In the 4th quarter, DreamWorks Animation will be releasing Megamind on November 5 and Shrek Forever After on DVD and Blu-ray on December 7. How To Train Your Dragon was released on DVD and Blu-Ray on October 15.

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DreamWorks Animation Announces $150M Share Repurchase; Company Claims 2010 Will Be Biggest Box Office Year Yet

DreamWorks Animation SKG, Inc. today announced financial results for its second quarter ended June 30th that shows profits declined 6.2%. Without a new home entertainment DVD in the marketplace, costs outpaced box office gains since the theatrical release of films is the most expensive time of their sales cycle. Total revenue was $158.1 million and net income of $24.0 million, or $0.27 per share on a fully diluted basis. “Our strong second quarter was driven primarily by the blockbuster performances of Shrek Forever After and How to Train Your Dragon, two of the top 10 films of 2010 on both a domestic and a worldwide basis,” said CEO Jeffrey Katzenberg. “We have once again surpassed $1 billion in worldwide box office and with Megamind still to be released on November 5th, we are on track to make 2010 not only DreamWorks Animation’s single biggest year at the box office, but also the biggest year ever for any CG animation studio.”

The Company also announced today that its Board of Directors has approved a new $150 million share repurchase program. For the six months ended June 30, 2010, the Company has repurchased approximately 3.1 million shares for approximately $111 million. I’ve previously reported that Katzenberg has been shopping DWA to several Big Media companies.

Shrek Forever After, which was released on May 21, 2010, contributed $51.8 million of revenue in the quarter, generated by its domestic box office performance as well as merchandising and licensing … Read More »

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Paramount First To Cross $1 Billion At 2010 Domestic Box Office

paramountlogoHOLLYWOOD, CA (June 29, 2010) – Paramount Pictures announced today the studio has crossed the $1 billion mark at the domestic box office, making it the first studio to accomplish the milestone this year. This marks the fourth year in a row that Paramount was the first studio to cross that plateau. Something no studio has done before. The studio currently holds the top spot in market share, with box office gross generated from five movies released thus far in 2010.

Based on figures through June 28th, Paramount has distributed four of 2010’s top ten grossing films. The year got off to a strong start with the Martin Scorsese thriller “Shutter Island” earning $128 million in the U.S., and also becoming the highest world-wide grossing film for the acclaimed director. Paramount followed with a string of strong releases, including Marvel Studio’s “Iron Man 2” ($306.9M) and DreamWorks Animation’s “How to Train Your Dragon” ($215.4M) and “Shrek Forever After” ($229.4M).

“This milestone reflects the hard work of so many people,” said Brad Grey, Chairman and CEO of Paramount Pictures. “I especially want to thank Rob Moore, Frederick Huntsberry, and Adam Goodman. We are all so proud of our teams, how they have worked together as well as with our partners. This commitment, coupled with the terrific creative talent we are in business with – Michael Bay, JJ Abrams, Martin Scorsese, Jon Favreau, Jeffrey Katzenberg and his DreamWorks Animation – have made these results

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