November 21st News Report from your Los Angeles Representative
WEEKLY UPDATE November 21, 2014
from Kelly Graham-Scherer, Los Angeles Representative - email@example.com
Happy Friday everyone,
Once again I want to remind everyone that the mobile version of the OMDC's award-winning locations database has now been launched.
The mobile database is designed for use in the office or out in the field and allows users to conduct full searches, view location files and photos, view packages, link to Google Street View and Maps, as well as easily click to call/e-mail location contacts. Additionally, they will be able to access a number of specialized components of the Location Database including personal Bankers Boxes, Short Term Location Listings, Research documents and In the Loop newsletters. Client Package links will also now have a mobile version to provide increased portability and connectivity.
To access the database on your mobile device, please go to m.digitallibrary.omdc.on.ca.
Believe it or not the holiday season is in full swing in Los Angeles and everyone is making preparations for the Thanksgiving holidays next Thursday and Friday. Like many others across the U.S., I'll be off for the week spending time with family.
A story this week about the continued popularity of New Orleans as a production destination is a good reminder of the competition that Ontario continues to face from maturing jurisdictions around the globe. As detailed by ABC News below, productions shooting there receive a 30% tax credit, plus an extra 5% on local crews and vendors.
Deadline this week featured a prominent story about Americans who seek status in Canada in order to facilitate work on production that has migrated north of the border. The story below asserts "American filmmakers opting for Canadian citizenship see it as a way to recoup some of the tens of thousands of jobs lost to...unfair trade advantage".
The Los Angeles Times published a really interesting and informative feature this week about Dana Walden and Gary Newman, who for the past 20 years have job shared the top position at Fox Television and were this summer named Chairman and Chief Executive at Fox Television Group. The story below contains a lot of details about the inner workings of Fox and how studios and networks operate across Hollywood.
Streaming continues to become mainstream: the Times this week reports that ratings giant Nielsen has devised a way to get a grip, albeit a restricted one, on measuring viewership for streaming shows online — providing a glimpse into the performance of shows on Netflix and Amazon.
Dreamworks Animation CEO Jeffrey Katzenberg has been in the news a lot lately openly entertaining takeover offers from companies like Fox and Hasbro. As reported in the Times below, many in the industry are now questioning his strategy as Hasbro talks collapse and the succession of failed deals has undermined the company's stock prices.
Finally this week, I hope you will join me in formally welcoming Michele Alosinac to the Toronto Film, Television and Digital Media Office. As reported in Playback below, Michele is the city's new film sector development officer.
You'll find the full text for the linked articles below my signature. Please feel free to distribute this e-mail widely and to get in touch with me with comments or links for inclusion. I'll be back in the office on Monday, December 1st and back with this report on Friday, December 5th.
Los Angeles Representative
Toronto/ Ontario Film Office
Hollywood South: Why New Orleans Is the New Movie-Making Capital
“Dallas Buyers Club” and “12 Years a Slave” are two blockbuster films with something in common, and it’s not just their Oscar nods.
Both were shot, not on set in a Hollywood studio, but on the streets of New Orleans.
Louisiana has recently earned a new reputation as “Hollywood South.” There are 14 films and TV shows currently in production in New Orleans, far out-pacing Hollywood, and A-listers including Sandra Bullock, Brad Pitt and John Goodman all have homes here.
“I am obsessed with [New Orleans] so far,” Kendrick said. “Just everything about it is -- it’s so unique. There’s just absolutely no other place in the country like it.”
"Mr. Right” director Paco Cabezas couldn’t say enough about shooting the movie there.
“[We] wanted a movie that was full of life so that’s why we came here,” Cabezas said.
Of course, there’s no party like a New Orleans party -- the music, the food, the beignets -– but those are not the main reasons movie producers are choosing the Big Easy and the Bayou state over old familiar shooting haunts like Los Angeles and New York.
“We were thinking about Puerto Rico at one point, Columbia, Toronto, Georgia, and the one big reason we ended up coming [to New Orleans] was the tax credit,” said producer Bradley Gallo.
Movie makers get a 30 percent tax break from the state of Louisiana, compared with the 20-25 percent offered in California and base of 20 percent in Georgia.
“Every dollar they spend in the state to a Louisiana-based company gets 30 percent back from the state of Louisiana,” said Katherine Williams, the director of Film New Orleans in the New Orleans mayor’s Office of Cultural Economy. “If they hire local crews and vendors that’s an extra 5 percent, [looking at 35 percent tax credit for every dollar spent.”
Those movies included “21 Jump Street,” its sequel “22 Jump Street,” “Django Unchained,” and even “Dawn of the Planet of the Apes," just to name a few.
For Louisiana, film and TV production here meant $813 million added to the local economy last year, according to Film New Orleans. For local technicians like Earl Woods, it meant a steady paycheck. Like so many in New Orleans, Woods said he was hit hard in Hurricane Katrina.
“When Katrina came, business was probably down six months before the movies started trickling back in,” Woods said. “I think the movie and film business helped rebuild the city financially a lot.”
And not only does filming in New Orleans provide jobs, it also helps young up-and-comers in the business earn more responsibility faster, like Mara LePere-Schoop. She works as a production designer, a title she said she might have had to wait another 10 years to earn in Hollywood.
“I’ve been very fortunate down here because it’s been so busy, had a lot of access to things I don’t think I would have necessarily had in L.A. or New York,” she said. “In some ways it was kind of a fast-track apprenticeship, where I got to do things that in other places wouldn’t have happened as quickly.”
Beyond the tax credit and job opportunities, many credit Brad Pitt and the film, “The Curious Case of Benjamin Button,” as a major turning point for the city. “Benjamin Button” was one of the first big movie productions in a post-Katrina New Orleans, and Pitt has become one of many celebrities who have given both their talents and time to rebuilding the Big Easy.
“Brad Pitt really fought to bring ‘Curious Case of Benjamin Button’ back to New Orleans after the storm,” Williams said. “They had planned on shooting it here and after the storm the studio was leary… I think he knew what it would mean for the city to showcase that it was dry and not under water and open for business.”
Blame Canada’s Tax Incentives For Dual-Identity Helmers
A few years ago, a veteran U.S. TV director was having trouble finding a gig. So much production was ending up in Canada that Americans were competing for fewer and fewer jobs. “Work started tapering off in the U.S.,” the director said. “I went on two interviews [for work in Canada], and when they found out I wasn’t Canadian, they said, ‘Sorry.’ I remember standing out on the corner and thinking, This won’t happen again — I’ve got to feed my family. So I got an immigration lawyer, established Canadian residency, and I’ve been working nonstop in Canada ever since. I know half-a-dozen guys who have done this.”
Dual residency has become a popular way for American filmmakers to find work with producers who get tax breaks when they hire Canadians. The veteran director says he has no qualms about his decision. “If it were Iran, I’d have a pang,” he said, laughing, “but I see Canada as a more refined version of the United States. It’s a cool country. I don’t see a big difference.
“People have been doing it for 20 years,” he continued. “Primarily it has to do with production companies getting a tax credit to film in a particular Canadian province. If you hire a certain number of Canadian workers, they give you a tax credit.” The credit can be as much as 60% of production costs, depending on the number of “points” a production accumulates.
It takes at least six points for a film or TV show shot in Canada to receive the tax credits: two each for the director and screenwriter; one point each for the lead and second lead actor; and one point each for the director of photography, production designer, music composer and film editor. Ten points earns the full break.
Vancouver-based immigration attorney Catherine Sas has been helping American filmmakers become permanent Canadian residents for more than 20 years. “Conservatively, I help five a year so that they can have the flexibility to work in both countries,” she told Deadline. “It’s got to be over a hundred people.” Sas said she’s one of many attorneys in British Columbia and Toronto who do the same thing — though perhaps none who have had more American filmmakers as clients as she has.
Sas, a partner in the Miller Thomson law firm, says her clients include directors, producers, actors, art directors, musicians, animators and other skilled industry workers. She noted that being a permanent resident “allows you greater flexibility to work in Hollywood and Hollywood North” – as British Columbia often is called. “It makes sense for people who want to have the flexibility to pursue this option.”
The lure of dual citizenship for U.S. filmmakers began in 1994 with the adoption of the North American Free Trade Agreement. Canada refused to sign off on the deal unless a cultural exemption was included allowing it to subsidize its film and TV industry. American negotiators caved and threw Hollywood under the bus by permitting Canada to lure American productions and jobs north of the border with the promise of cost-cutting tax incentives. And the only thing Hollywood likes more than a good movie is a good tax incentive.
American filmmakers opting for Canadian citizenship see it as a way to recoup some of the tens of thousands of jobs lost to that unfair trade advantage. “I do know some people who have made that transition,” said an assistant director who became a Canadian the old-fashioned way – by marrying one.
“I know of a lot of people who have done it,” says a Canadian filmmaker, “and it has done well for them. They can work in both countries. But I know others who it hasn’t worked out for. Once you become a dual citizen, you end up vying for Canadian productions, and usually not at the level of the bigger network and cable shows. A lot of guys went up there thinking this could get them jobs but ended up feeling stuck.”
One downside is that more than half of the Canadian tax credit is provincial, and in order to qualify for the full benefit, production companies must employ workers where they reside and pay taxes. So a writer or director living in Toronto is less valuable to a Vancouver-based production than one living in the western province. This has led to a ghettoization of dual citizens in British Columbia, Ontario and Quebec.
“I know directors who have done this, and a couple of actors too,” said an American producer who has worked on numerous U.S. films shot in Canada but who has yet to take the dual-citizenship leap himself. “It’s a long process. I thought about it, but I never did it,” he added.
“First you have to become a Canadian permanent resident” — akin to obtaining a U.S. green card — said Vancouver-based immigration attorney David Cohen. “After three years of residency, you can apply for citizenship. After that it usually takes a year or two to become a Canadian citizen.”
Having a job offer, however, can cut that period in half. “In British Columbia, an employer can petition the BC government saying that you are a person with a particular skill, and if the government agrees, you will be put on a fast track,” said the veteran director who was made a permanent resident of Canada after only a year and a half. “Once you become a permanent resident, you become a ‘landed immigrant,’ which is like having a green card, and can work in the Canadian province where you reside and pay your taxes.”
And because the income from this runaway production is earned in Canada by a resident of Canada, the U.S. can’t tax it — though one of the prices of dual citizenship is that taxes are much higher in Canada. But for American filmmakers who have gone this route and managed to find regular work in Canada, it might be worth it. After all, another benefit is that their families qualify for free health care.
Fox's Newman and Walden one of Hollywood's most lucrative partnerships
Most Hollywood marriages don't turn out like this.
Fifteen years ago, several executives were jockeying for a plum position running 20th Century Fox Television, the production company behind "The Simpsons" and "Ally McBeal." The boss made a decision, but it came with a catch: The top contenders, two seemingly mismatched executives, could do the job together — or not at all.
Gary Newman acknowledges he initially wasn't thrilled. His colleague, Dana Walden, didn't say much; she was pregnant and queasy with morning sickness.
"I remember going through a brief period of 'What does this actually mean to share a job,'" Newman recalled. "But by that weekend, we were on the phone talking about how we would approach the job."
That's how one of Hollywood's most lucrative partnerships began.
They are like a married couple in a weird way, and I mean that in the most positive way. They present a united front. And they have each other's back. - Kiefer Sutherland, the star and an executive producer of "24"
The pair have since built the Fox television studio into one of the industry's most prolific by producing culture-defining hits such as "24," "Glee," "Sons of Anarchy," "How I Met Your Mother" and the animated "Family Guy."
They've also been proudly independent by operating the studio autonomously from its sister division, the Fox Broadcasting network. Television production studios like to sell their shows to different TV networks because they can spark bidding wars and boost the price for their hottest prospects. For example, 20th Century Fox produces "Modern Family" for ABC — not Fox — because ABC was desperate for good comedies and showed the most interest.
But there were signs of strain. The Fox studio and Fox network occasionally would engage in combat over shows that they shared, such as a pitched battle over license fees for the sleeper hit "Bones."
MWhile the studio churned out hits, the once high-flying TV network this past spring was on the ropes. Its aging ratings engine, "American Idol," lost 20% of its audience and Fox fell into fourth place. The network's chief of seven years threw in the towel, which prompted Newman and Walden to approach their bosses with a proposal.
Combine the television studio and the broadcast network into one division, and trust them to manage it.
And this time, they were the ones who ruled out splitting up the team.
"Over our dead bodies," Newman said.
In July, Newman and Walden were named chairmen and chief executives of the newly created Fox Television Group.
Nearly 750 employees work in their expanded division, located at the Fox Studios complex in West Los Angeles. Around the lot, and throughout the TV industry, the duo long have been known simply as "Dana and Gary." There's a running joke that you rarely see one without the other.
"They are like a married couple in a weird way, and I mean that in the most positive way," said Kiefer Sutherland, the star and an executive producer of "24," Fox's rogue government agent blockbuster. "They present a united front. And they have each other's back."
Newman and Walden have a tight bond. They treat each other with respect, and cheer for each other's success. They instruct their subordinates that both must be included in email discussions; no one is allowed to go around one to get to the other.
"No divide and conquer," Walden said.
For a few weeks this fall, the pair even shared a single office in Fox's administration building as construction workers remodeled the executive suite. There was an executive-size desk in the middle of the room, which Walden occupied, and off to the side was a modest table with a desktop computer.
"My Bob Cratchit desk," Newman joked, a reference to Ebenezer Scrooge's long-suffering clerk.
Newman grew up the middle child. He's the lawyer, the numbers guy. He saw value in a prime-time cartoon that had been canceled by the Fox network, and championed the return of "Family Guy" to the small screen, which mushroomed into a multibillion-dollar franchise.
He was raised in Beverly Hills, excelled in sports and even played on Yale University's basketball team. (He's 6 feet 4.) He married his law school sweetheart, Jeanne, who went on to become a partner at a prominent entertainment law firm. They own an organic winery in Santa Barbara County, Jorian Hill Vineyards, which they named after their children.
Walden, the eldest of three girls, was raised in Studio City. She tried tennis, softball and gymnastics until age 13, when she found her passion: riding and showing horses.
She began her career as a publicist, including a stint promoting Arsenio Hall, until she got her own promotion into the executive ranks. Newman likes to take credit for helping introduce Walden to her husband, Matt, two decades ago during a party celebrating "The Simpsons."
Walden is driven, a perfectionist known for understanding the creative process and inspiring talented and temperamental writers who create the shows that are the lifeblood of the company. She has a knack for refocusing a conversation, particularly for those who might underestimate her, with a piercing stare or a sharp comment.
Show creator Hart Hanson remembered the day, nearly a decade ago, that she changed the DNA of "Bones."
Hanson had pitched several story lines, which revolved around the show's forensic team solving decades-old murders.
"And Dana, in that withering way of hers, said: 'How do we make this more than just some old dusty, boring bones?" Hanson recounted. "She forced me to go back and look at what we were doing. Now, few of our bodies are over a week old."
Entertainment mogul Peter Chernin, who used to run Fox, said he paired the two in 1999 for a simple reason.
"I didn't want them to drown by having too much on their plate," Chernin said. "In some ways, it was the perfect arrangement. Dana had never really done anything that was business-related, and Gary didn't come from the creative side. And it helps to have a partner to lean on."
Years ago, Hollywood studios often were managed by two strong executives. Not anymore.
"At some point, these arrangements don't work primarily because people let their egos get in the way," Chernin said. "But neither has done that, and that's a fundamental testament to their character. Gary and Dana deserve all the credit for making it work."
Network ratings have been declining, but Fox has experienced a steeper slide than most.
Viewers have more choices for entertainment, including streaming services Netflix and Amazon.com. Broadcast television has long been supported by revenue from 30-second commercial spots. But half the homes with TVs in the U.S. now are equipped with digital videorecorders that enable viewers to fast-forward through commercials, reducing their value to advertisers.
Fox got punched during last summer's TV advertising sales auction. It took in roughly $200 million less in advertising commitments than during the 2013 market because of its sagging ratings.
Then Fox's fall season got off to a shaky start. Its expensive reality show, "Utopia," which brought 15 strangers together to build a sustainable community, was greeted with a collective yawn by viewers and canceled.
The network glommed on to a ray of hope in its dark Batman prequel, "Gotham," which has delivered strong ratings. But several returning shows stumbled. Ratings are down 8% compared with last fall.
Even Rupert Murdoch, chief executive of 21st Century Fox, acknowledged the difficulties facing the network during a meeting with shareholders last week in Los Angeles. "We face challenging head winds," Murdoch said. "But we have new creative leadership and must be patient as we rebuild our schedule."
With the stakes so high, there is plenty of pressure on Walden and Newman.
"They need more shows with broad-based appeal," said Sam Armando, a senior vice president at ad firm SMGx. The network, he said, has been obsessed with developing shows that are trendy and different, but too much of it appeals to a narrow niche.
"Sometimes Fox is guilty of trying too hard," Armando said.
Walden and Newman said they hope their management style will set the tone as they blend the two factions into a well-functioning family. Some of their showrunners agreed.
"They made the studio feel like a family," said Ryan Murphy, a co-creator of "Glee" and "American Horror Story," which runs on FX.
"If they believe in you, then they want you to be successful in all parts of your life, and that's unusual for a boss," Murphy said, adding that Newman and Walden even counseled him on the importance of bringing his shows in on budget and managing his earnings. "They've mentored me quite a bit."
Steve Levitan, co-creator of the hit comedy "Modern Family," said his close relationship with Walden and Newman has kept him at the Fox studio for more than a decade.
"They stick with you, and that's very comforting for a writer," Levitan said. "I really do feel like I have a home there."
Walden and Newman said taking the additional turf was not so much about empire building, but more as a way to respond to industry shifts.
"The realignment was intended to provide stronger programming for the network," Walden said. "And we didn't really have a choice if we wanted our studio to continue to succeed. We needed to be able to control our destiny."
The move should also give a boost to the studio, which had been staring at a shrinking market. Currently, only about half the shows on the Fox network come from the Fox production studio. The percentage is expected to grow now that Walden and Newman control both sides.
Fox is the last of the Big Four to align the operations.
Years ago, rivals NBCUniversal, CBS Corp. and Walt Disney Co.'s ABC combined their networks and studios. That consolidation has led to a reduced appetite for programs produced by rival companies because networks typically give preferential treatment, and often even more viable time slots, to shows that they own.
The future of the Fox studio increasingly is tied to the fortunes of an improved Fox network.
"We want this company to succeed," Newman said. "Dana and I have been here collectively for 50 years and we care a lot about this company. Having an important role, and a larger imprint, was very appealing. There is a lot more for us to do."
Nielsen to measure Netflix, other online video streams -- to an extent
Ratings giant Nielsen has devised a way to get a grip, albeit a restricted one, on measuring viewership for streaming shows online — providing a glimpse into the performance of shows on Netflix and Amazon.
The Nielsen company said it will begin tracking viewership of online video subscription services, including Netflix and Amazon, as early as next month.
For us to finally tell you how 'House of Cards' is doing, Netflix would have to say to us, 'Here you go, add this to the library and report on it.' - Brian Fuhrer, Nielsen senior vice president
Programs tracked would only include those that Nielsen’s clients, which largely consists of traditional TV networks and studios, submit for analysis. Meaning one of Hollywood’s biggest secrets -- viewership numbers for Netflix and Amazon original series such as “Orange Is the New Black” and “Transparent,” respectively — will remain a mystery.
“That’s the No. 1 misunderstood point that is out there,” Brian Fuhrer, Nielsen senior vice president, told the Times. “A client has to participate with us. For us to finally tell you how 'House of Cards' is doing, Netflix would have to say to us, ‘Here you go, add this to the library and report on it.’”
Television networks have long complained that Nielsen hasn’t done an adequate job in measuring rising online viewing. But the company has faced several obstacles, including lack of cooperation from Netflix and Amazon.
The rise in use of subscription streaming services likely could be responsible for the dramatic audience declines for traditional television networks, Bernstein & Co. media analyst Todd Juenger said Wednesday.
Nielsen estimates that 40% of TV households now subscribe to at least one subscription video-on-demand service. And those households, Juenger noted in a research report, watch 20% less TV after they sign up for video-on-demand.
“That fact, in and of itself, ought to be enough to shock the industry into attention,” Juenger wrote. Recent data points “seem to confirm our fears that SVOD is directly cannibalizing ad-supported TV consumption.”
Fuhrer said the new viewership-tracking method was born out of trying help crack the puzzle.
“Our clients have a lot of detail about live viewing, DVR viewing, and [video on demand] viewing — and they really understand those relationships,” Fuhrer said. “Once it goes beyond that to other providers, they really don't understand the life cylce of their program. That’s what we’re trying to do here. We’re leveraging technology we already have but building it out so it’s a little more powerful.”
The streaming sites, so far, have maintained an upper hand when negotiating syndication renewals, as only they are privy to how much a show or episode is viewed. Netflix and Amazon declined to comment on Nielsen’s plan, which was first reported by the Wall Street Journal.
Nielsen will track programs’ streaming viewership by analyzing audio elements transmitted from its meter boxes. The company is already processing some programs’ information in trial mode, with plans to build up the content library in the next couple of months.
While the move from Nielsen helps tread ground on the new frontier, there are some limitations.
Tracking on mobile devices, such as tablets and phones, won’t yet be part of the measurements, as the technology doesn’t support it.
Fuhrer stressed everything has to start somewhere.
“Out clients are trying to make some really difficult decisions about how to administrate their programs,” he said. “I don't know so much about how it will change the power dynamic, but it makes our clients more informed and paints them a better picture so they can make better decisions.”
Strategy of DreamWorks Animation CEO Jeffrey Katzenberg is questioned
It has been a rough month for Jeffrey Katzenberg.
In the space of a few weeks, the mogul and co-founder of DreamWorks Animation SKG Inc. has been rebuffed by three high-profile potential buyers: Japanese telecommunications giant SoftBank Corp., Rupert Murdoch's 21st Century Fox and Hasbro Inc.
Katzenberg, known for driving a hard bargain, may have overplayed his hand. The studio executive was said to be pursuing a deal worth about $3 billion — about $1 billion above the company's current market value. In the case of Hasbro, investors also balked at the idea of getting into the volatile movie business and the company risked alienating its main licensing partner, Walt Disney Co.
The collapse of deal talks left some Wall Street analysts wondering what Katzenberg's strategy is.
"It does look desperate," said Eric Wold, a media analyst with B. Riley & Co. "I'm sure [Katzenberg] can find something if he keeps looking around, but I don't think these actions are going to help the valuations."
The succession of failed deals undermined DreamWorks Animation's stock price, sending it on a roller coaster ride since late September. Investors sent shares up 26% when SoftBank appeared poised to make an acquisition, before the stock came crashing back down again.
The biggest volatility came Monday after Hasbro backed out. Shares plunged 14% in the biggest one-day drop since the studio went public in 2004. The stock closed Wednesday at $22.70.
But, even before Wall Street began speculating about a new buyer for DreamWorks Animation, the stock had already been suffering. Shares have fallen 36% this year as the company's financials have been squeezed by box-office misfires.
"This is a company that is facing major operational challenges," said Vasily Karasyov, an analyst with Sterne Agee.
The studio's next animated sequel, "Penguins of Madagascar," is expected to do solid business when it debuts next week. (DreamWorks)
The misfires have eroded profits and led to cost-cutting at the studio, including the elimination of more than 300 jobs last year after taking an $87-million write-down on "Guardians."
"This is a company that continues to fail to live up to expectations," said Rich Greenfield, an analyst with BTIG, who has a sell rating on the company. "I don't know why somebody would want to buy them."
DreamWorks bounced back this summer with the hit "How to Train Your Dragon 2," which has grossed more than $618 million at the worldwide box office. The studio's next animated sequel, "Penguins of Madagascar," is expected to do solid business when it debuts next week.
The outlook for next year is more uncertain, however.
"DreamWorks has a relatively rough year ahead of it," said Tony Wible, a Janney Capital Markets analyst.
Wible and other analysts do not have high hopes for "Home," an original movie due out in March.
And, as The Times reported this week, DreamWorks has decided to push back the release date for "B.O.O.: Bureau of Other Worldly Operations," two people close to the studio said.
The movie, directed by Tom Wheeler and featuring the voices of Bill Murray and Melissa McCarthy, was set to debut June 5. But DreamWorks executives are weighing releasing the movie in fall 2015 or in spring 2016.
Katzenberg was said to be unhappy with the progress of the film and concerned about the competition next June, when Pixar will release its movie "Inside Out."
A spokesman for DreamWorks Animation said: "Animated features are our most valuable asset and we regularly evaluate how to maximize their value, including determining the most opportune time to release a film."
Late next year, DreamWorks will release the third installment of the "Kung Fu Panda" franchise. The movie is expected to do well, especially in China, but could lose business to Disney's "Star Wars: The Force Awakens," which opens five days earlier on Dec. 18.
The box-office challenges explain why Katzenberg has been eager to find a buyer sooner rather than later. Although DreamWorks remains financially sound, operating as a stand-alone movie studio will be increasingly challenging, analysts say.
For instance, rival Walt Disney Co. is able to shore up its balance sheet via a variety of businesses, including theme parks, television networks such as ESPN, and the Marvel franchise. DreamWorks cannot offset its losses when an animated movie sputters. Nor can it count on once-booming home video sales to help drive profits, given the collapse in the DVD business.
What's more, the market is more crowded with new rivals that can produce popular movies at lower cost.
Universal Pictures and Warner Bros. have scored some surprise box-office hits with the "Despicable Me" films and "The Lego Movie," respectively. Disney also has raised the competitive stakes with such releases as "Frozen," the highest-grossing animated movie of all time.
"We have been inconsistent," Katzenberg acknowledged in an interview this year. "The only thing I can guarantee you is we are our harshest critics."
He declined to comment for this story.
Despite the uneven box-office results, DreamWorks could still be an attractive target for suitors.
One bright spot has been its investments in television and digital media at a time when more advertising is moving online.
DreamWorks last year signed a landmark deal to produce 300 hours of animated shows for the Netflix streaming service. It also acquired Awesomeness TV, the popular teen YouTube network, for $33 million. DreamWorks has been in talks to sell a stake in the venture to Hearst Publishing.
Revenue from television and other non-film businesses is expected to grow to 35% of the company's overall revenues of about $1 billion in 2015, up from 22% in 2011, Wible said. "He's done a good job of getting DreamWorks diversified," Wible said of Katzenberg.
DreamWorks also has strong business ties to China.
That could make it attractive for a Chinese investor eager to expand into Hollywood such as e-commerce giant Alibaba. DreamWorks operates an animation studio in Shanghai with Chinese partners that is producing animated and live-action content for Chinese and international markets, including "Kung Fu Panda 3."
"The company is still a potentially attractive takeover play," said Tuna Amobi, an equity analyst at S&P Capital IQ. "Jeffrey may have to lower his expectations now and perhaps be a little more amenable to a deal he might have otherwise rejected."
Michele Alosinac on changes at Toronto’s film office
Michele Alosinac, the new film sector development officer for the Toronto Film, Television and Digital Media Office (TFTDMO), wants to start from the ground up to create a film office that is more efficient and better connected to the whole of Toronto’s screen-based industries.
“We are trying to reevaluate everything – how we’ve been doing it, why we’ve been doing it and find a way to do it better and more efficiently,” Alosinac told Playback Daily.
The new role of film sector development officer is part of a larger overhaul of Toronto’s film office, which has seen Toronto film commissioner Zaib Shaik take on an expanded mandate, including music and multimedia initiatives.
With Shaik’s remit expanded, Alosinac is now front line on the production side. She’ll gather feedback from the industry and pass it along to Shaik, who can then liaise with the city about how to make Toronto a more attractive place for producers.
Having started just over a month ago, Alosinac says she already has plans on how to make Toronto a more attractive production destination.
First up is better coordination between departments. The city’s historic sites department is a good example, she says. With numerous museums and dozens of other properties across the city, productions currently have to contact each location directly to inquire about filming. Alosinac wants location scouts to be able to come to the Toronto film office directly, where staff can then coordinate shooting details with the historic sites department.
“We will advocate for you,” Alosinac said
She also said she wants to expand the film office’s relationship with the digital media and post-production sectors. To achieve this, Alosinac is meeting with companies across these sectors to find out how they can collaborate to make the city a more attractive place to complete all work related to films, from shooting to animation to postproduction.
“We want to drive business here, and we want to drive awareness about it as well,” Alosinac said.
She is also aiming to foster more personal relationships with producers on the ground, noting that face time can leave a lasting impression. For example, if there is a construction site infringing upon a shoot location, someone from the film office could be on-site to ask the construction crew to move.
“Those are the kind of things that personalize the experience here,” Alosinac said.
Prior to joining the film office Alosinac spent more than 20 years working in the film and television industry (Live Here, Buy This, Property Virgins, The Unsellables, Carnival Eats) and was the business development and film officer at the Ontario Heritage Trust.