SoftBank reportedly in talks to acquire DreamWorks Animation

It has been reported SoftBank has begun negotiations with DreamWorks Animation (DWA) to acquire the Hollywood studio. The reports follow SoftBank’s decision last month to drop its pursuit for T-Mobile US amid antitrust concerns from regulators.

SoftBank now seems to be setting its eyes on the content market as it looks for a potential addition to its US subsidiary Sprint to better its position against big rivals AT&T and Verizon Communications.

Reportedly SoftBank has offered $32 per share, $3.4 billion in total for the studio, although a possibility of some kind of partnership instead of a full acquisition has also been flagged. I has also been reported DWA’s current CEO Jeffrey Katzenberg would sign a five-year contract to remain with the company if the deal was to go through.

DWA, a publicly traded but fairly small company, has been struggling for some time. Being snapped up by a large conglomerate such as SoftBank would protect the company from investor pressure. The studio is vulnerable as its stock has a tendency to rise and fall according to the success of any individual film it produces. The company currently releases three films a year and although it would like to expand into TV, online video and consumer products, this would be difficult considering its size and the competition from the likes of Walt Disney, Blue Sky Studios and Illumination Entertainment.

SoftBank on the other hand is in a good financial position to acquire. This is especially the case following the recent IPO of Alibaba from which the Japanese giant made considerable gains as a major holder of the Chinese internet company. It is also understood that if SoftBank was to successfully add DWA to its list of some 1,300 companies it already has investments in, the studio could accelerate its growth in the fast growing Asian market. Two years ago DWA joined a group of Chinese investment companies to set up a studio in China, but the market holds a lot more potential, easier to reach with SoftBank’s backing.

Last month SoftBank acquired Finnish mobile game maker Supercell, which has created such titles as the Clash of Clans. It also owns a controlling stake in GungHo Online Entertainment Inc., a Japanese gaming company. But according to unconfirmed reports, SoftBank CEO Masayoshi Son has his eyes firmly set on the US market, where the addition of a content provider would bring a competitive edge to the company’s mobile business.

These developments are showing the trend of large telco companies looking for best ways to add value to their business through content. This is to attract customers and keep competition from OTTs at bay. Another example of this trend AT&T’s ongoing bid for pay TV service provider DirecTV.