Please ensure Javascript is enabled for purposes of website accessibility

Why DreamWorks Should Steer Clear of the Comic Book Business

By Tim Beyers – Feb 19, 2014 at 7:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two reasons Dreamworks shouldn't cash in on the comic book business.

DreamWorks Animation's (DWA) new publishing division might want to avoid creating and selling comic books, Fool contributor Tim Beyers says in the following video.

Sound crazy? It might, especially when you consider the vibrancy of the comic book business and consumers' appetites for pop-culture fare. And yet, there are at least two reasons for the company not to cash in directly: IDW and APE Entertainment. DreamWorks has licenses with both publishers.

IDW is publishing books based on DreamWorks' adaptations of the various Jay Ward characters (i.e., Rocky and Bullwinkle, Mr. Peabody and Sherman, etc.), while APE has licenses for Kung-Fu Panda and Penguins of Madagascar, and has published a four-issue Megamind miniseries. Trade magazine ICv2 has confirmed that DreamWorks intends to keep honoring both agreements.

Smart move, Tim says. Comics publishing is getting riskier; as more titles flood the market, readers may cut back in response. ICv2 reports that in December, only three of the top 300 books sold 100,000 or more copies to stores. Only one eclipsed that threshold in January.

In licensing to IDW and APE, DreamWorks mitigates the risk of entering the comic book business at the wrong time while still cashing in on some of the brand equity of its intellectual property. A prudent mix investors should appreciate, Tim says.

Now it's your turn to weigh in. Have you read any of DreamWorks' licensed titles? Or would you rather see DreamWorks cashing in directly, as Time Warner and Walt Disney have? Please watch the video to get Tim's full take on the state of the comic book business, and then leave a comment to let us know where you stand.

Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Time Warner and Walt Disney at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool recommends DreamWorks Animation and Walt Disney. The Motley Fool owns shares of Walt Disney. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DreamWorks Animation SKG Inc. Stock Quote
DreamWorks Animation SKG Inc.
DWA

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.