‘Shrek’ lifts results at parent studio

DreamWorks Animation SKG Inc., the studio run by Jeffrey Katzenberg, said third-quarter profit soared on sales of “Shrek the Third,” this year’s second-highest grossing U.S. film.

Profit jumped to $47 million, or 47 cents a share, from $10.5 million, or 10 cents, a year earlier, Glendale-based DreamWorks said Tuesday. Sales almost doubled to $160.8 million.

“Shrek the Third” has earned $321 million in U.S. ticket sales, second only to Sony Corp.’s “Spider-Man 3,” according to Box Office Mojo. DreamWorks’ “Bee Movie,” in theaters Friday, will probably generate $175 million in U.S. ticket sales, said Evan Wilson, an analyst with Pacific Crest Securities in Portland, Ore.

“More than anything, investors are focused on the launch of the ‘Shrek the Third’ DVD, and the launch of ‘Bee Movie’ this weekend,” Wilson said. Their success “will dictate the near-term direction of the stock,” he said.

Shares of DreamWorks, which competes with Walt Disney Co.’s Pixar unit, rose 42 cents to $32.53.

“Shrek” contributed $92.1 million to revenue in the period ended Sept. 30, and DreamWorks reiterated that DVD sales of the film would drive fourth-quarter revenue. The company’s films are distributed by Viacom Inc.’s Paramount Pictures.

Katzenberg, who oversaw animated hits such as “The Lion King” and “The Little Mermaid” at Disney, may sell 18 million “Shrek the Third” DVDs this year when they go on sale Nov. 13, Banc of America Securities analyst Michael L. Savner wrote. DreamWorks may sell an additional 13 million in 2008, he said.

“The market for blockbuster, family-orientated DVDs is healthy,” Savner said.

Box-office sales for “Bee Movie” won’t generate significant revenue in the current quarter because of upfront marketing and distribution costs, DreamWorks said. The company also said its first TV special, “Shrek the Halls,” wouldn’t have a material financial effect in the period. The show airs Nov. 28 on ABC.

Profit excluding an income tax benefit was 43 cents a share, matching the average analyst estimate compiled by Bloomberg. Sales were also in line.

The studio also announced that it began working on a superhero parody under the working title of “Master Mind” and slated the movie for a 2010 theatrical release. It is being produced by Red Hour Films, actor Ben Stiller’s company.