Comcast Helps Future-Proof Itself with Dreamworks Purchase

Photo illustration | Dan McQuade

Time was, Comcast made its money by selling you cable television. They’d bundle you a package of channels, try to sell you a premium movie channel or two, tack on fees for box and remote rental, and reap the rewards. Cable was almost the only way you could see every Sixers game or the latest Tales from the Crypt episode.

This model is going away. 2013 was the first year the pay-TV industry lost subscribers. You can buy HBO separately from any cable package with HBO Now. You can watch a massive library of TV shows with subscriptions to Netflix, Hulu or other services. You can buy TV show episodes à la carte from various services. Comcast says it will soon allow you go to sans cable box and just use a forthcoming app. Comcast still makes a bulk of its money off selling people cable (and Internet and, for some reason, landline phones). But one day, cord-cutters are going to significantly cut into that business.

Comcast didn’t get to build the tallest building in Philadelphia by being stupid: The Roberts family has recognized this. It was one of the prime reasons the company purchased NBC Universal in 2011; becoming more of a content provider was so important to Comcast that the company bought the remaining 49 percent of NBCUniversal (the company dropped the space in its name under Comcast ownership) just two years later.

Along with NBC, owned-and-operated local networks, cable channels, production and movie companies, Comcast also acquired several theme parks in the NBCU acquisition. As the cable model slowly whittles away, Comcast will need more ways to get you to fork over your hard-earned cash.

As such, yesterday Comcast announced its intention to buy DreamWorks Animation, the studio behind the hit movie franchises Shrek, Kung Fu Panda and Madagascar.

“DreamWorks Animation is a great addition to NBCUniversal,” Steve Burke, CEO of NBCUniversal, said in a release. “Jeffrey Katzenberg and the DreamWorks organization have created a dynamic film brand and a deep library of intellectual property. DreamWorks will help us grow our film, television, theme parks and consumer products businesses for years to come.”

Comcast understands the value of intellectual property. It has turned the minions, originally the sidekicks of the evil Felonious Gru in Despicable Me, into a money-making machine. Last summer’s standalone Minions movie was Universal’s most profitable film ever. And those minion characters can also be sold on T-shirts and plush dolls, made into spin-off specials, et cetera.

With the purchase, Comcast picked up a ton of characters it can now monetize in the same way. In addition to the characters from Shrek, Kung Fu Panda and Madagascar, DreamWorks Animation owns the rights or licenses to a ton of characters. Its DreamWorks Classics branch alone has the rights to Felix the Cat, Where’s Waldo, the Jay Ward characters (Rocky & Bullwinkle, Mr. Peabody), the Tribune Media Services comic strip characters (get ready for a new Dick Tracy movie!) and even Voltron.

CNN compared the purchase to Disney’s acquisition of Pixar in 2006, though this is a much smaller scale. And that’s the idea. As Wired writes, the DreamWorks characters can easily be monetized in its its Universal Studios theme parks. Plus, DreamWorks has a boatload of kid- and family-friendly content.

“We have enjoyed extraordinary success over the last six years in animation with the emergence of Illumination Entertainment and its brilliant team at Illumination Mac Guff studio,” Burke said in the release, referencing the studio behind the minions. “The prospects for our future together are tremendous. We are fortunate to have Illumination founder Chris Meledandri to help guide the growth of the DreamWorks Animation business in the future.”

It is true that Comcast’s old business model is slowly dying. With this DreamWorks Animation purchase, the company has continued to future-proof itself.

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