Comcast Corporation (NASDAQ: CMCSA), the largest U.S. cable operator, is in talks to takeover DreamWorks Animation Skg Inc. (NASDAQ: DWA) for over $3 billion, in a deal that could make the cable giant a rival to Walt Disney Co. in the lucrative family-entertainment business. Shares of DreamWorks Animation jumped up 16.7% to $31.65 during Wednesday midday.
DreamWorks Animation was spun off from DreamWorks Studios in 2004 as a separate listed company. The previous DreamWorks Studios was founded in 1994 by Steven Spielberg, David Geffen and Jeffrey Katzenberg, who moved with the spin-off and remains chief executive of the animation company. DreamWorks, which is in the middle of a turnaround, has been reducing its dependence on the volatile feature films business to concentrate on increasing revenue from licensing its original content to media houses and video-streaming companies such as Netflix Inc. and Verizon Communications Inc.'s Go90.
As with all such talks, a deal may not be reached. The tentative purchase price represents a reasonable premium over DreamWorks’ current $2.3 billion market value.
Moreover, Comcast announced the first quarter financial result on Wednesday which beat analyst’s expectation. Total revenue increased 5.3% to $18,790 million compared with last year $17,853 million. Net income rose approximately 3.9% from $2,141 million last year to $2,224 million this quarter. Earnings per share up 7.4% to $0.87 from $0.81 last year. Share of Comcast increased 0.82% to $61.55 during Wednesday midday.
It wasn’t immediately clear what the deal would mean for DreamWorks’ chief executive, the veteran Hollywood mogul Jeffrey Katzenberg. Someone familiar with this deal said that DreamWorks and Illumination Entertainment, Universal’s animation studio, would remain separate brands.