DreamWorks Animation chief executive Jeffrey Katzenberg has been sued by shareholders, who say he improperly feathered his nest amid the $3.8 billion takeover of the company by Comcast (NASDAQ: CMCSA) last month.
In its proposed class-action suit, the Ann Arbor City Employees Retirement System took issue with a deal point that gives Katzenberg a consulting role with DreamWorks New Media through perpetuity.
The position only pays the mogul $1 a year, but he collects 7 percent of annual profit for the unit, which oversees lucrative operations such as digital programming arm AwesomenessTV.
"Had Katzenberg not received the extraordinarily valuable side deal, Comcast would have been required to increase the merger price to secure Katzenberg's support," the complaint said. The lawsuit was filed in the Court of Chancery in Delaware, where Glendale, Calif.-based DreamWorks Animation is incorporated.
Outlining the corporate strategy for his company's acquisition of the movie studio, Comcast CFO Mike Cavanagh said a key reason for the deal was to acquire DreamWorks' kids TV animation business, which will be used to create SVOD content.
"The DreamWorks team did a great job of building a TV animation studio, and that's something Universal has not been able to do," Cavanagh said at the J.P. Morgan Global Technology, Media and Telecom Conference on May 23.
Cavanagh said this content will "largely be distributed over SVOD," leading to speculation that Comcast will soon launch an subscription video-on-demand platform either through NBCUniversal, or maybe even through its X1 cable video platform.
For more:
- read this Los Angeles Times story
- read this Reuters story
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