DreamWorks Animation Interested In Combining With Viacom’s Paramount Pictures, CEO Says

DreamWorks Animation SKG Inc. CEO Jeffrey Katzenberg said he would be attracted to the prospect of merging the Hollywood animation studio with Viacom’s Paramount Pictures, and not just taking a minority stake in the company. Speaking at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco Tuesday, Katzenberg reportedly said he “fantasizes” about merging the two studios if there was a good financial partner to back the deal.

The statement comes a week after Paramount Pictures — behind films like “Star Trek” and “Mission Impossible” — said it was considering bringing in an equity partner. Viacom is considering selling a "significant" minority stake in Paramount Pictures, CEO Philippe Dauman said last week.

"I could imagine that with a good financial partner coming with us, putting together the asset of Paramount and DreamWorks could be extremely valuable," Katzenberg said. The company has a market value of about $2.2 billion while Paramount has been reportedly valued at around $4 billion. Viacom acquired Paramount for about $10 billion in 1994, but has come under pressure to sell-off assets as its cable networks unit and movie business have struggled in recent times.

However, Katzenberg ruled out taking a minority stake in Paramount Tuesday and said that his company did not need a merger partner, as film and TV investments made in recent years were beginning to show returns.

DreamWorks is in the middle of a turnaround, which has focused on cutting down the number of films the independent studio makes while increasing revenue from licensing its TV shows, consumer products and producing online content for media houses.

Katzenberg, who worked with Paramount for 11 years, said Tuesday that the next 12 months would be "choppy" for DreamWorks. The studio announced an overhaul last year after a series of box-office duds, including “Turbo” and “Penguins of Madagascar." The company cut 500 jobs and closed its Redwood City, California, animation studio and announced that it would trim its output to only two films a year.

“We’re probably about halfway through achieving the goals that we set out for ourselves,” Katzenberg said Tuesday. “It was a pretty dramatic and serious really reset of the business.”