By Chandni Doulatramani
REUTERS - DreamWorks Animation SKG Inc
DreamWorks shares jumped about 9 percent as the success of "Guardians" offset the disappointment in "Turbo", DreamWorks' animated movie about a garden snail that races in NASCAR.
The success of "Rise of the Guardians" on TV is in sharp contrast to its poor performance in cinemas, which had forced the company to write down about $165 million in the first quarter and post its first quarterly loss in almost six years.
Based on William Joyce's "The Guardians of Childhood" book series, the film about how childhood heroes protect children from an evil spirit, cost roughly $145 million to produce. It was the last movie distributed by Paramount for DreamWorks.
The Guardians movie contributed feature film revenue of $42.4 million, or about 35 percent, to the third quarter, primarily from worldwide pay television, the company said.
"'Rise of the Guardians' significantly outperformed our expectations on a better pay TV contribution and frankly what we continue to see is signs of strength in the DVD market for the company," Janney Montgomery Scott analyst Tony Wible told Reuters.
Hollywood studios have grappled with a declining home video market for years as DVDs fall out of favor.
DreamWorks saw the pattern reversing when its home entertainment sales increased at the end of 2012 and the upward trend continued in early 2013.
Analyst Wible had expected the company to take a big write down on "Turbo" in the quarter, but DreamWorks Chief Executive Jeffrey Katzenberg said it was still a profitable movie.
The movie's mostly domestic home video results will add to the fourth quarter and its international release will be divided between the next two quarters, DreamWorks' Chief Operating Officer Ann Daly said.
"Turbo", which hit U.S. theaters on July 17, tracks a snail who dreams of becoming the fastest snail in the world and features the voices of Ryan Reynolds and Samuel L. Jackson.
The weak performance of "Turbo" followed the success of "The Croods", a film that tracks a prehistoric family's road trip and features the voices of Nicolas Cage and Ryan Reynolds.
DreamWorks had hoped its third-quarter results would be driven by "Turbo". But the movie had to contend with a glut of animated films released between May and July, including "Monsters University", "Epic" and "Despicable Me 2".
The studio's next film, "Mr. Peabody and Sherman", will not be released until March. Earlier this year, DreamWorks shifted the movie's release date from November 2013.
The film, which features the voices of Mel Brooks and Leslie Mann, is a time-travel animated comedy about a talking genius dog, Mr. Peabody, and the boy he adopts, Sherman.
DreamWorks' net income fell to $10.1 million, or 12 cents per share, in the third quarter, from $24.4 million, or 29 cents per share, a year earlier.
Revenue fell 17 percent to $154.5 million. Last year the third quarter included the international box office success of "Madagascar 3: Europe's Most Wanted".
DreamWorks' revenue beat analysts' estimates of $139.5 million. Analysts were expecting the company to break even on a per-share basis, according to Thomson Reuters I/B/E/S.
DreamWorks' shares were up at $30.25 in extended trading. They closed at $27.82 on the Nasdaq on Tuesday.
(Reporting by Chandni Doulatramani in Bangalore; Editing by Maju Samuel, Rodney Joyce)