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Wednesday, February 29, 2012

Dreamworks dumps. Murdoch out as Chair and CEO of NewsCorp. UlraViolet droops but hopes to bloom.

Company Town

The business behind the show

Kung Fu Panda 2
Image: A scene from "Kung Fu Panda 2." Credit: DreamWorks Animation

Reason to frown at the numbers. DreamWorks Animation saw a sharp decline in profit in the fourth quarter of 2011 compared with a year earlier, reflecting weak holiday DVD sales.

The Glendale studio reported that it earned net income of $24.3 million, or 29 cents a share, in the quarter, versus a profit of $85.2 million, or 99 cents a share, in the fourth quarter of 2010.
Revenue during the quarter totaled $219 million, down 21% from the same period in 2010, DreamWorks reported after markets closed Tuesday.

For the year, the company logged net income of $86.8 million on revenue of $706 million, compared with net income of $170.6 million on revenue of $784.8 million in 2010.

Part of the reason for the decline was that DreamWorks released two movies last year, "Kung Fu Panda 2" and "Puss in Boots," compared with three films in 2010.

DreamWorks recently announced plans to build a studio in Shanghai, which it billed as a landmark agreement with two state-owned Chinese media operations.

Oriental DreamWorks, a joint venture with China Media Capital and Shanghai Media Group in concert with Shanghai Alliance Investment -- an investment arm of the Shanghai municipal government -- is to establish a family entertainment company in China.

With an initial investment of $330 million, the Shanghai studio would develop original Chinese animated and live-action movies, television shows and other entertainment catering to the Chinese market.
Photo: James Murdoch. Credit: AFP/Getty Images

James Murdoch has resigned his position as executive chairman of News International.
Once seen has the likely successor to his father, Rupert Murdoch, as chairman and chief executive of global media giant News Corp., James Murdoch has seen his reputation tarnished and business judgment questioned by his handling of the phone-hacking scandal that has torn through News Corp.'s British newspaper unit.

Murdoch's relinquishing of his News International title had been expected given that he recently relocated from London to News Corp.'s New York headquarters. Still, the backdrop of the move was not anticipated a year ago when the hacking scandal was still relatively minor in the public's eye.
In announcing the move, News Corp. made no mention of the hacking into phones of celebrities and royal family members and bribing of public officials alleged to have gone on at the company's now closed News of the World tabloid and its Sun newspaper.

Instead, Rupert Murdoch praised his son's leadership at other units of the company.

"He has made lasting contributions to the group's strategy in paid digital content and its efforts to improve and enhance governance programs," the senior Murdoch said.

James Murdoch said he would focus now on growing News Corp.'s international television business.
Close watchers of the Murdoch family will no doubt start analyzing what the latest news means for James Murdoch's future at News Corp. When Rupert Murdoch visited the Sun the other week in antcipation of the launch of a new Sunday edition, it was older son Lachlan, not James, by his side.

JeffBewkesPhoto: Time Warner Inc. CEO Jeff Bewkes. Credit: Brendan Hoffman / Bloomber

UltraViolet Video Cloud shaky opening will not stop media giants. Time Warner Chief Executive Jeff Bewkes defended last year's shaky public debut of the digital movie technology UltraViolet, led by his company's studio Warner Bros., claiming it was imperative to launch early rather than wait for further improvements.

"You get into this debate, 'Should you wait until it's perfect?' " he said at a Deutsche Bank-sponsored media and telecommunications conference in Palm Beach, Fla., on Tuesday. "The reason we didn't is consumers are used to seeing these new products improve over time. They know version 3.0 is going to be better than 1.0."

UltraViolet allows people who buy compatible DVDs and Blu-ray discs to also get a copy of a movie stored online that they can access on compatible Internet-connected devices. Warner and other studios are counting on the new technology to encourage people to keep buying movies, instead of renting or illegally pirating them, in the digital age.

"Some have speculated ... consumers don't want to own movies in a digital environment," Bewkes said. "We don't think that's right. One of the biggest problems is that while it's easy to rent a movie and watch it on your TV, until now it has not been easy to buy a movie digitally, manage a digital collection and watch it on the device of your choosing."

More than 1 million people have registered to use UltraViolet accounts, according a recent report on PaidContent. However, the UltraViolet initiative, which includes most Hollywood studios, suffered a wave of bad publicity when it launched this past fall. Consumers complained about cumbersome user restrictions and a complicated registration process.

Warner is the only studio that includes UltraViolet copies with every disc it sells. Sony Pictures, Universal Pictures and Paramount Pictures include it only with select films. 20th Century Fox isn't expected to jump on board until later this year, while Walt Disney Pictures is not part of the UV consortium.

At the conference, which is attended by media business investors, Bewkes urged his audience to pressure other entertainment companies to more aggressively support UltraViolet. "If we don't" he said, "we run the real risk of habituating consumers to rental when in fact they may prefer to own and build collections of movies."

Studios make significantly larger profits from movie sales than rentals.

Bewkes also urged attendees to pressure other media companies to put more television content online as part of TV Everywhere, which lets cable subscribers watch channels on digital devices. Warner has aggressively supported that initiative, making available more than 1,000 hours of content from its cable channels, including TNT and TBS, as well as more than 1,600 hours for the similar HBO Go.

Chase Carey expresses concern about "American Idol" ratings
Photo: Chase Carey. Credit: Andrew Harrer / Bloomberg

American Idol Ratings cause fear at the top of the food chain. News Corp. Deputy Chairman and President Chase Carey expressed concern about the declining ratings of Fox's "American Idol" during an investors conference Tuesday.

"The ratings aren't where we would have hoped," Carey said at Deutsche Bank's annual Media and Telecommunications conference in New York.

"American Idol," in its 11th season, is still a hit. But it is no longer untouchable. This season the show's audience has fallen 20% in total viewers to 19.8 million, compared with almost 25 million last season. Among adults 18 to 49, the show is down 26%.

Carey, who typically steers clear of the creative side of the entertainment business, said he thought "American Idol" must find a way to "drive some fresh energy" to it. He noted that with the success of NBC's "The Voice" and the introduction of Fox's own "The X Factor," the talent show category is much more competitive than in previous years and "American Idol" needs to up its game.

Fox, he said, has to "continue to make sure the show has a freshness and insight and originality to it."
However, Carey isn't ready to say "American Idol" is nearing the end. The glass, he said, is half-full.
"We think it is a franchise with a lot of legs left in it," Carey said, adding the program still makes Fox "a lot of money."

Teri EverettChanges near the top from Fox to Time Inc. Veteran media spokesperson Teri Everett, who recently exited the top communications job at News Corp., has joined Time Inc. as executive vice president of corporate communications for the publishing group.
In her new role, Everett will oversee media relations and publicity, internal communications and government affairs. She will report to Time Inc. Chief Executive Laura Lang.
Everett most recently served as senior vice president of corporate affairs at News Corp., a company she joined in 2000. Since last summer, the media conglomerate has been grappling with the fallout of a phone-hacking scandal involving its publishing group in the United Kingdom.
She has long ties to Gary Ginsberg, Time Warner's executive vice president of marketing and communications. The two worked closely together at News Corp.
Time Inc. is a division of media conglomerate Time Warner, which publishes such magazines as "Time," "People" and "Sports Illustrated."

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