Dreamworks Animation, the studio behind hit film franchises like Shrek and Kung Fu Panda, is being swept up in a $3.8 billion acquisition.
NBCUniversal, a division of Philadelphia-based cable giant Comcast, on Thursday said that it would acquire DreamWorks. The studio, whose movies also include the Madagascar and How to Train Your Dragon series, will become part of the Universal Filmed Entertainment Group, which folds in Universal Pictures, Fandango and NBCUniversal Brand Development.
"DreamWorks Animation is a great addition," said NBCUniversal CEO Steve Burke in a press release. "Jeffrey Katzenberg and the DreamWorks organization have created a dynamic film brand and a deep library of intellectual property. DreamWorks will help us grow our film, television, theme parks and consumer products businesses for years to come."
The acquisition is expected to close by the end of 2016, following antitrust and regulatory approval. Under the terms of the deal, NBCUniversal will pay $41 per share to holders of DreamWorks common stock, a 27 percent premium based on Wednesday's closing price of $32.20.
The deal comes as communications companies, like AT&T, Comcast and Verizon, race to differentiate themselves with video and digital content that they can deliver over their existing broadband and wireless networks. Each of these major players has been gobbling up exclusive content. Comcast has been at the forefront with the 2011 acquisition of NBCUniversal. The DreamWorks acquisition is a continuation of this strategy. And with DreamWorks, which caters specifically to families, experts say Comcast has checked off all the boxes.
"We live in a multiplatform media world today," said Peter Csathy, CEO of Manatt Digital Media, a consulting and legal services firm that serves media and entertainment clients. "Kids' animation content is perfect for that. These beloved characters sell well in movies, on TV and digital-first platforms like mobile devices."
What's also just as important for Comcast is the fact that animated characters are great for marketing in the physical world via theme-park rides, toys and other merchandising. This means more opportunity for Comcast to tie DreamWorks' characters into its existing NBC Universal amusement parks and merchandise businesses.
"The lesson from Disney has been that, if it's executed well, you can take a movie like 'Frozen' and turn it into a lifestyle," said equities analyst Craig Moffett with the firm MoffettNathanson. "Comcast is banking on the fact that characters from 'Shrek,' 'How to Train Your Dragon,' and 'Despicable Me' have latent value beyond the movies that can be mined for rides in theme parks and through other cross-promotions in merchandise and TV shows."
Update, 12:27 p.m. PT: This story was updated with additional reporting and commentary from industry experts.