DreamWorks Animation Chief Jeffrey Katzenberg ‘fantasizes’ about merger with Paramount Pictures

It’s a Hollywood marriage DreamWorks Animation Chief Executive Jeffrey Katzenberg said he “fantasizes” about: the merging of the animation studio with Paramount Pictures.

Katzenberg floated the idea Tuesday while speaking at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. He brushed aside notions that he’d be interested in buying a minority stake in Paramount Pictures, instead contemplating the idea of a full merger of the two studios.

“I could imagine that with a good financial partner coming with us, putting the assets of Paramount and DreamWorks together could be extremely valuable, and we could bring a lot to that business,” Katzenberg said.

The conjecture comes as Viacom-owned Paramount Pictures, which is behind such films as “Star Trek” and “Mission Impossible,” has said it is considering bringing in an equity partner.

“I’m not spending a lot of time tactically thinking about it,” Katzenberg said. “Do I fantasize about it though? Yeah. I wouldn’t do it if I didn’t have a financial partner to come along and put a big piece of capital into that. I would want to do it in a way that was a good thing for the company and for shareholders, not just because it would be a good thing to have.”

A Paramount spokesperson said the studio had no comment.

Katzenberg cut his teeth at Paramount, eventually becoming president of production. And Paramount served as a distribution partner for DreamWorks Animation movies for seven years until 2013, when the studio struck a deal with Twentieth Century Fox.

Like Paramount, DreamWorks has confronted its own share of challenges. Last year, the company overhauled its film operations in the wake of a series of box-office flops, including “Turbo” and “Penguins of Madagascar,” and reduced its output to only two films a year. The company cut 500 jobs and closed its Redwood City, Calif., animation studio.

Katzenberg, echoing sentiments he made to investors when the company posted its fourth-quarter results last week, said the next 12 to 18 months for DreamWorks would be “choppy” as it resets itself.

The resetting is showing some initial promise. “Kung Fu Panda 3” has grossed more than $314 million globally since its January release. That follows last year’s hit “Home,” which brought in $386 million worldwide.

The children’s animation studio has put a growing emphasis in building out its television operations with high-profile deals with media houses and streaming companies such as Netflix.

Its expanding television unit has become the company’s major source of cash flow. In the fourth quarter, its revenue from television offerings more than doubled from the year prior to $104.9 million.

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

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