A Taxpayer Bailout for DreamWorks Animation?

Tracey Nearmy / AP Photo It’s been a miserable year for animation titan Jeffrey Katzenberg, who was marooned from his former producing partners and fleeced by Bernie Madoff. Now, oddly, comes troubled Bank of America with a $175,000 promotion to offset ticket prices for his new movie.

You can look at a glass as half empty or half full. But however you look at it, Jeffrey Katzenberg’s cup has contained a bitter brew of late. In a year that has much of Hollywood anxiously fretting over the future, the man who was once the K in DreamWorks SKG—planted impressively between Steven Spielberg and David Geffen in that uber-powerful acronym—finds himself separated from his former partners as he fights through a particularly trying period in his long career.

Katzenberg has hyped his upcoming movie, Monsters vs. Aliens, opening on March 27, as a crowning triumph for his DreamWorks Animation studio. But getting this film released in the manner that Katzenberg had wished—and promised—has been a daunting challenge to the end. This morning, Wall Street analyst Rich Greenfield sent out an email revealing a potentially controversial promotion for Monsters v. Aliens, in which Bank of America is offering coupons to offset the premium that customers must pay (an extra $2 or more per ticket) to see the film in 3-D. Greenfield notes that he is unaware of any B of A announcement regarding this offer; he only learned of it through chat on Twitter. "We find it odd that a bank that just received $45 billion in government aid is paying for consumers across the U.S. to see a movie in 3-D vs. 2-D at no extra cost," he writes. "We also wonder whether the presence of [DreamWorks Animation] President Lew Coleman helped [the company] convince Bank of America to enter into the promotion, as Coleman is a former vice chairman and CFO of Bank of America."

“We acknowledge and accept that with public support, taxpayers are demanding that banks be more conservative in their spending and rightly so,” says a Bank of America spokesman.

In an exclusive interview about the movie with The Daily Beast earlier this week, Katzenberg did not mention his deal with B of A even when asked specifically about the premium charges. (When we asked Katzenberg to address the B of A promotion this morning, he replied that he had no information on it.)

Bank of America spokesman Joe Goode told us this morning that promotion is costing the institution $175,000. "We acknowledge and accept that with public support, taxpayers are demanding that banks be more conservative in their spending and rightly so," he says. "I also believe that banks have been criticized for activities that are of benefit." This one fits into that category because it "rewards customers for their loyalty at very little cost to the bank." Goode says B of A is pursuing promotions "in a strategic and cost-effective manner to support and grow our business and generate returns for investors—a group that now includes the American taxpayer." As for the connection with former B of A executive Lew Coleman, he says that was not relevant to the deal. "DreamWorks helps us reach a key customer demographic—women and families," he says.

It's not clear whether the B of A promotion will grow into a fully developed kerfuffle (there are so many for Congress and the cable channels to choose from). But for Katzenberg, this is just one more potential trouble spot among the many that he has been facing. Just fifteen years ago, the diminutive Katzenberg cast a huge shadow in Hollywood, a member of the very exclusive club of studio chiefs. As chairman of the Walt Disney studios for a decade that ended in 1994, he made his most lasting mark by reviving the studio’s moribund animation division, cranking out hits from Little Mermaid to Lion King. After an epic battle with his boss, Michael Eisner, he ended up on the street—but not without a huge settlement and a posse of powerful friends. Within a few weeks, he had teamed up with Spielberg and Geffen in a bold effort to create Hollywood’s first new studio in decades. The plan was to build a media powerhouse and in its early years, DreamWorks seemed to be living up to its promise—kicking off the Shrek franchise and winning three consecutive Oscars for Best Picture (American Beauty, Gladiator, A Beautful Mind).

Since then the dream has pretty much shattered. As DreamWorks foundered, the animation division had to be split from live-action into a separate company. At this point, all that's left on the live-action side is Spielberg’s production company, and even he is having trouble raising cash. Last month, Spielberg made a deal to distribute DreamWorks films through Disney—which means that for the foreseeable future, the DreamWorks partners cannot be re-united. There simply is no room at Disney for another animation label or for Jeffrey Katzenberg.

Instead of presiding over a media empire, Katzenberg now finds himself chief executive of an animation company that releases a couple of movies a year. DreamWorks Animation has defied the odds by making with hits including Shrek, Madagascar and Kung Fu Panda, but clearly this is not what Katzenberg had in mind a few years back when he led reporters on a tour of the property that was to be the future home of the DreamWorks media conglomerate. "He thought of himself as a master of the universe, as an industry statesman,” says one associate. “He’s now realized he’s off to the side. He’s not at the cool kids’ table.” Like other studios, the company faces tough challenges in this economy.