Universal Filmed Entertainment Group has finished the realignment of its "Pay 1" output deals with the major streaming services, re-upping and expanding an agreement with Netflix for its animated features. 

Netflix already had an agreement in place to distribute films from Universal's Illumination animation production arm, perhaps the best known of these existing within the poplular "Minions" franchise. 

Now, Netflix will also be an exclusive streaming home for DreamWorks Animation titles, including those from the "Shrek," "How to Train Your Dragon" and "Puss in Boots" franchises. 

Like the two other Pay 1 deals Universal has signed recently, the agreement calls for the studios corporate sibling, streaming service Peacock, to have exclusive rights to its animated titles for four months after they complete a 120-day theatrical run. The titles also revert back to Peacock for the final four months of their 18-month Pay 1 window. 

So Netflix gets exclusive rights for the 10 months inbetween. 

The Netflix agreement follows a similar deal Universal announced last week with Amazon, putting its live-action titles on Amazon Prime Video in the same 10-month configuration, between bookended Peacock engagements. 

For Netflix, the deal comes three months after it signed a Pay 1 deal with Sony for exclusive Pay 1 domestic rights to the major studio's entire slate, starting with its 2022 slate. 

As for Universal, it has restructured its Pay 1 agreements so that Peacock has first--and last--dibs to all of its live-action and animated titles. 

“As we’ve seen with our own slate, Netflix families love watching and rewatching animated films, and this deal allows us to expand our library to bring our audience more of what they want to watch," said Colin Morawski, director of studio licensing for Netflix, in a statement. 

“Netflix has been a terrific partner and we‘re thrilled to expand our relationship,” added Peter Levinsohn, vice chairman and chief distribution officer for Universal. “Universal Filmed Entertainment Group produces some of the biggest animated franchises and boldest originals from some of the most influential, impactful and inspiring creators in the industry. This exciting agreement further demonstrates the importance of that content to our distribution partners as they grow their audiences and deliver the very best in entertainment."

If you can’t beat ’em, buy ’em.

With the two major distribution mergers of the past year — Charter Communications-Time Warner Cable and Cablevision Systems-Altice N.V. — heading for the finish line, some analysts wonder if content could be the next beehive of activity on the deal front.

Greasing the speculation wheels: Comcast’s $3.8 billion pact to buy DreamWorks Animation, which some believe could encourage other TV distributors to take a harder look at the programming space.

The DreamWorks Animation deal could shed new light on programming targets, BTIG media analyst Brandon Ross said in a blog post, especially as distributors look for new ways to differentiate themselves from the growing list of over-the-top providers. DreamWorks was just the first in what could be a series of content deals, Ross said.

SUITORS FOR PARAMOUNT STAKE

Viacom has said it has more than a dozen potential suitors for the planned sale of a minority interest in movie studio Paramount. And talk heated up in April that mixed martial arts content provider Ultimate Fighting Championship was for sale. Reports in the MMA industry press said UFC could be worth as much as $6 billion.

Ross said the potential jewel in the content heap could be World Wrestling Entertainment, the scripted sports entertainment juggernaut headed by Vince McMahon. While neither WWE nor McMahon has even hinted at being interested in a sale, Ross said the time could be right to give some serious thought to it.

WWE makes sense for a strategic buyer on several fronts. Its content is popular with young viewers (Monday Night Raw is a consistent ratings draw for USA Network), it has a strong digital presence with the over-the-top WWE Network and, at a total valuation of about $1.3 billion, it’s digestible for larger players.

Comcast’s willingness to pay a premium for DreamWorks Animation — about 20 times cash flow — to basically take out controlling shareholder and CEO Jeffrey Katzenberg indicates it might be willing to act similarly with McMahon.

Keeping Vince McMahon around would be critical to any deal with WWE, Ross said. A strategic investment might be the best way to make a deal happen.

FBN Securities cable, satellite and entertainment managing director Robert Routh thinks the chances the McMahons would sell are slim. Besides, he said, content-hungry distributors have several other potential targets.

Routh does not think the Comcast-DreamWorks deal will necessarily lead to more content acquisitions by Comcast: federal regulators would probably prevent that. And with NBCUniversal already in the fold, Comcast probably doesn’t need more content.

Pairing content and distribution used to be more commonplace. For example, Time Warner Inc. owned both Time Warner Cable and Turner Broadcasting Systems and Tele-Communications Inc. was paired with Liberty Media. Those companies and their successors eventually split programming and distribution assets after synergies became less apparent.

“It’s kind of like Back to the Future,” Routh said. “Distributors are starting to say that owning content with distribution, under the right conditions, can make a ton of sense, especially if it’s highly focused content.”

CHART: Back to the Future

Pay TV operators, once keen on divesting programming assets from their distribution business, may be looking at adding content to the mix as they seek to further differentiate themselves from OTT competitors. Here are a few possible candidates for consolidation.

Company                       Market Cap                                                   Top Content

Starz . . . . . . . . . . . . . . .$2.67 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . Starz, Encore

Scripps Networks . . . . . $7.87 billion . . . . . . . . . . . . . . . . . . . . . HGTV, Food Network

Viacom . . . . . . . . . . . . . $16.5 billion . . . . . . . . . MTV, Comedy Central, Nickelodeon

AMC Networks . . . . . . . $4.6 billion . . . . . . . . AMC, IFC, WE tv, BBCA, SundanceTV

MGM . . . . . . . . . . . . . . . $3.5 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . thisTV, EPIX

WWE . . . . . . . . . . . . . . . $1.27 billion . . . . . . . . . . . . . . . . . . . . . . . . . . WWE Network

Lionsgate . . . . . . . . . . . $3.26 billion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EPIX

DHX Media . . . . . . . . . $762.6 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . SuperWhy!

RLJ Entertainment . . .  $8.06 million . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  Acorn TV

SOURCES: FDM Securities, Dow Jones, Multichannel News estimates

About one year after abandoning its effort to become the uber-dominant distributor in the country when it walked away from its $67 billion purchase of Time Warner Cable, Comcast has turned its attention to programming, with its NBCUniversal unit's $3.8 billion deal to buy DreamWorks Animation, a move that will help boost its content library while potentially seeding its theme park business with new characters to build attractions around.

In DreamWorks Animation, NBCUniversal gets access to a film library that includes Madagascar, Kung Fu Panda, Shrek and How to Train Your Dragon, as well as a growing TV production arm that has churned out programming like Dawn of the Croods, Turbo and more for Netflix and other distributors. In NBCU, DreamWorks Animation finally gets the deep-pocketed parent that can help it produce more films and, with its cable and broadcast networks, provide another outlet for content.

Reaction to the deal was mixed. DreamWorks stock soared 24% (up $7.75 each) on April 28 to $39.95 per share, while Comcast shares fell 15 cents each (down 0.24%) to $61.15 per share.

Some analysts criticized the deal as being too pricey – it represents a 50% premium to DreamWorks’s stock price before rumors of a sale began to surface. Others said the benefits included additional theme park revenue from high-profile attractions and potential cost-savings on the animation side. NBCUniversal’s animation arm – Illumination Entertainment, under which DreamWorks would fall after the deal closed – farms out production of most of its animated movies to Japanese companies for a third of the price that DreamWorks pays.

“[T]o us, this deal makes a lot of sense, less because of the added animation heft to Illumination Entertainment (the studio that created The Minions) but more for what it could mean for the Universal Theme Parks,” Telsey Advisory Group media analyst Tom Eagan wrote in a note to clients. “It's easy to imagine a Shrek, Kung Fu Panda or Madagascar ride at the Universal parks."

BTIG Research media analyst Rich Greenfield took another approach, arguing in a blog post that DreamWorks has been on the block for at least three years, hasn’t traded above $40 per share since 2010 (the Comcast deal values the shares at $42 each) and has no other potential bidders besides NBCU.

“While we believe Comcast acquiring DWA is a mistake, [Comcast chairman and CEO] Brian Roberts clearly believes the acquisition is a good use of Comcast’s capital,” Greenfield wrote.

The analyst added that what could be attractive to Comcast is DreamWorks's 51% stake in Awesomeness TV, but said he believes that is overvalued, too – Verizon bought a 24.5% stake in the short-form video company earlier last month for about $159 million. And Verizon plans to develop content with AwesomenessTV for its go90 mobile video service, a potential Comcast competitor.

“DreamWorks will help us grow our film, television, theme parks and consumer products businesses for years to come,” NBCUniversal CEO Steve Burke said in a statement. “… The prospects for our future together are tremendous.”

DreamWorks will be headed by Illumination Entertainment CEO Christopher Meledandri, wile current CEO Jeffrey Katzenberg will become chairman of a new digital arm – DreamWorks New Media, comprisig the company’s ownership interests in Awesomeness TV and NOVA. Katzenberg will also serve as a consultant to NBCUniversal.

In perhaps one of the worst kept secrets in the media business, Comcast's NBCUniversal said it will purchase content provider DreamWorks Animation in a deal worth $3.8 billion that will bolster the broadcast, cable and film giant's content lineup as well as providing new fodder for its theme parks.

Rumors of a deal had first been reported by The Wall Street Journal earlier this week.

“DreamWorks Animation is a great addition to NBCUniversal,” said Steve Burke, CEO of NBCUniversal, in a statement. "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. 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. 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.”

Under the terms of the agreement, DreamWorks Animation has an equity value of approximately $3.8 billion. DreamWorks Animation stockholders will receive $41 in cash for each share of DreamWorks Animation common stock. The agreement has been approved by the boards of directors of DreamWorks Animation and Comcast, and the controlling shareholder of DreamWorks Animation has approved the agreement by written consent.

The transaction is expected to close by the end of 2016the year, subject to antitrust approvals in the U.S. and abroad, as well as the satisfaction of other customary closing conditions.

Following the completion of the transaction, DreamWorks Animation CEO and co-founder Jeffrey Katzenberg will become chairman of DreamWorks New Media, which will comprised the company’s ownership interests in Awesomeness TV and NOVA. Katzenberg will also serve as a consultant to NBCUniversal.

“Having spent the past two decades working together with our team to build DreamWorks Animation into one of the world’s most beloved brands, I am proud to say that NBCUniversal is the perfect home for our company; a home that will embrace the legacy of our storytelling and grow our businesses to their fullest potential,” said Katzenberg in a statement. “This agreement not only delivers significant value for our shareholders, but also supports NBCUniversal’s growing family entertainment business. As for my role, I am incredibly excited to continue exploring the potential of AwesomenessTV, NOVA and other new media opportunities, and can’t wait to get started.”

Comcast was advised by Davis Polk & Wardwell LLP on legal matters. DreamWorks Animation was advised on financial matters by Centerview Partners and on legal matters by Cravath, Swaine & Moore LLP. DreamWorks Animation's Board of Directors was advised on legal matters by Munger Tolles & Olson LLP.

Comcast, a little more than a year after abandoning its purchase of Time Warner Cable, has apparently turned its sights to programming, and is reportedly in talks to purchase DreamWorks Animation for more than $3 billion, according to a report in The Wall Street Journal.

The Journal offered few details, but noted that talks could break down at any point. The purchase price would be a healthy premium to DreamWorks Animation’s current $2.3 billion market value.

Investors were pleased with the news – DreamWorks Animation stock was up about 18 % ($5.03 each) in early trading Wednesday, to $32.15 per share.

DreamWorks Animation is headed by former Disney executive Jeffrey Katzenberg and has had box office hits like Madagascar, Shrek, How to Train Your Dragon and Kung Fu Panda. On television, the studio produces animated programming for Netflix like Turbo, Dawn of the Croods and DinoTrux.

Comcast owns Universal Studios, which has its own animation unit, producing features like Despicable Me and Minions.

DreamWorks has a spotty history on treh merger front. In September 2014 its stock soared more than 25% after reports surfaced that it was in discussions with Japanese wireless carrier Softbank in a deal that was worth about $3.4 billion. That deal ever materialized.  A few months later toymaker Hasbro was reportedly in talks with the studio, but squashed that deal after its stock fell sharply and merchandising partner The Walt Disney Co. privately expressed displeasure.

In 2015, DreamWorks Animation laid off about 500 workers (about 19% of total employees) as it focused more on movies.   

According to a report in the New York Times, the most recent talks would involve a combination of DWA with Comcast’s own animation division Illumination Entertainment. Illumination chief Christopher Meledandri would likely head the combined unit, with DreamWorks Animation founder and CEO Jeffrey Katzenberg exiting. Katzenberg could receive an exit package worth about $21.9 million in the event of a change of control and his involuntary termination or termination for good reason, according to DWA’s most recent proxy statement.

On a conference call with analysts to discuss first quarter results, Comcast opened by saying it would not answer questions regarding deal rumors and speculation.   

While DreamWorks has had spotty success with animated movies – the latest installment of its Kung Fu Panda franchise, Kung Fu Panda 3, made $504.4 million in worldwide box office, behind the $665.7 million Kung Fu Panda 2 generated in 2011 – it also owns an interest in growing online video producer and distributor AwesomenessTV, which could be attractive to Comcast. The programmer is part of the cable operator’s “Watchable” online video offering, which launched a beta test version in September.

More as this story develops.

Verizon Communications said Wednesday that it has reached an agreement to purchase a 24.5% interest in AwesomenessTV in a deal that will values the multi-platform programmer at $650 million.

DreamWorks Animation, which formed AwesomenessTV in 2013, will remain is majority shareholder with 51% ownership, while Hearst will own the remaining 24.5%. Brian Robbins, AwesomenessTV founder and CEO, and Brett Bouttier, AwesomenessTV’s president, will continue to lead the Company.

In addition to its equity investment, Verizon will enter into an agreement with AwesomenessTV to create a premium short-form mobile video service, which will operate as an independent brand.  The new service will launch as part of the go90 offering and Verizon will fund the initiative through a multi-year agreement with AwesomenessTV.

 “In addition to delivering compelling scripted and non-scripted series with high production values, AwesomenessTV has demonstrated an ability to zero in on programming that Gen Z and millennials want to watch,” said Verizon executive vice president and president of Product & New Business Innovation Marni Walden in a statement . “The content AwesomenessTV has produced for go90 has exceeded all our expectations with shows such as Guidance and Top Five Live. That’s why we want to be in the AwesomenessTV business."

The new premium content service will initially be exclusive to Verizon platforms in the United States, while AwesomenessTV will retain rights for the rest of the world.

 “This deal gives us the resources to work with the biggest talent in front of andbehind the camera to create this new branded service and produce the most premium short-form content ever, made specifically for the device racking up the fastest growing viewership – the mobile phone,” Robbins said in a statement. “With Verizon joining DreamWorks Animation and Hearst as part of our equity ownership group, we benefit from the strategic insight and resources of the entertainment and communications industries’ most visionary companies and leaders. Our goal is to be the media company of the future, where content and distribution go hand in hand – we are now one giant step closer to that future."

  “The creation of this new branded service represents a transformational step, not just for AwesomenessTV, but also for the entire mobile video landscape,” said DreamWorks Animation CEO Jeffrey Katzenberg in a statement.  “This agreement is clearly impactful for AwesomenessTV – with annual revenues expected to more than double in the first 12 months of content delivery – and even more exciting is the expansion of our relationship with Verizon, one of the world’s most powerful marketers and content distributors, and their commitment to explore with us this incredible opportunity.”

LionTree Advisors LLC acted as advisor to Verizon during this transaction and J.P. Morgan Securities LLC advised DreamWorks Animation. The transaction is expected to close in the next 60 days.

Brenda Freeman, the former Turner Broadcasting and DreamWorks Animation marketing executive, has been hired as chief marketing officer for National Geographic Channel and Nat Geo WILD, filling the post that was vacated when Courteney Monroe was made CEO of National Geographic Channels last April. Freeman's hire follows the appointment in September of Tim Pastore as president of original programming & production as Monroe moves to bolster her senior team.

Freeman joins from her most recent post as global head of television marketing for DreamWorks Animation, where she spearheaded the vision and global marketing efforts for the rapidly expanding DreamWorks TV business, managing brand marketing and advertising plans for more than 1,000 hours of original content around the world, NGC said in a release.

As CMO, Freeman will oversee the channels' marketing efforts, including brand development and strategy, consumer on-air and off-air campaigns, trade marketing, digital marketing, digital content, social media, media strategy, partnership marketing and all creative for NGC and Nat Geo WILD. She also will oversee the network’s consumer communications efforts, including consumer publicity campaigns, talent relations, special events, public affairs, education outreach and digital publicity for both networks.

“Brenda’s energy, insight and vast experience in entertainment marketing make her a great fit as we continue to elevate the National Geographic Channels within the industry and in the minds of consumers,” Monroe said in the release. “With her talents, we have another great addition to our senior team poised to take us to the next level.”

“I am thrilled to join Courteney and her team at such an exciting time in the evolution of the National Geographic Channels,” Freeman, who was a Multichannel NewsWonder Woman in 2014, said in the release. “Both channels have such exciting projects in the works, I cannot wait to get started. And it is a real treat to be able to return to my hometown.”

Freeman earlier spent six years at Turner Broadcasting, most recently as chief marketing officer for Turner Animation, Young Adults and Kids Media. At Turner, Freeman was responsible for all areas of marketing and network operations, including digital, games, on-air, advertising, consumer and trade communications, special events and affiliate support for the global multiplatform Cartoon Network, Adult Swim and Boomerang brands.