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DreamWorks in Talks with Sony Regarding Distribution Deal

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DreamWorks (NASDAQ: DWA), the animation and family entertainment studio, is in talks with entertainment corporation Sony (NYSE: SNE) in an attempt to strike a distribution deal.

DreamWorks currently has a distribution deal with Viacom's (NASDAQ: VIA) Paramount Pictures, though Reuters reports that the deal is due to expire in 2013 and Paramount rejected a request from DreamWorks CEO Jeffrey Katzenberg to extend the deal by a year but to cut the amount that Paramount receives in revenue from 8 percent to 7 percent.

DreamWorks looks to be working hard to keep hold of as much money as it can, as it works on the forthcoming American Dream theme park, reported by Benzinga last week.

Benzinga stated that the theme park, "will feature characters from the animation studio's most popular films, including Shrek, How to Train Your Dragon, Kung Fu Panda, Puss in Boots, and Madagascar.

"In addition to the DreamWorks theme park, American Dream will feature an indoor water park, an indoor ice skating rink, an indoor ski and snowboard park, a movie theater, nearly 1.7 million square feet of retail space, and 150,000 square feet of "fine dining" and restaurants."

The 8 percent that Paramount currently earns averages at about $50 million for each DreamWorks Film. It is thought that CEO Katzenberg is loathing continuing to allow that amount of money disappear from the incoming revenue every time his company releases a new movie.

For that reason, Katzenberg is keen to set up an internal distribution company and only have Sony distribute internationally.

Either way, it would see that the CEO will be watching the cashflow a lot more carefully going forward.

On Monday, DreamWorks traded at about $19.10, down roughly 1.7 percent. Sony traded at about $12.60, down roughly 0.5 percent.

Follow me @BCallwood.

Posted-In: Jeffrey Katzenberg Paramount Pictures ReutersNews Contracts Markets Trading Ideas Best of Benzinga


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