By Sue Zeidler
LOS ANGELES (Reuters) -
DreamWorks Animation SKG Inc
(DWA.N) said on Tuesday it was locked in an exclusive deal to
distribute DVDs on Toshiba Corp's (6502.T) HD DVD format even
though the Japanese electronics maker plans to quit the
technology.
"We have a partnership with Toshiba and have an obligation
to see this through," DreamWorks Chief Executive Jeffrey
Katzenberg said on Tuesday.
"As you know, we have been well-compensated for our
support. It really is in their court at this point to really
declare what the next step will be. We're poised either way to
jump into the marketplace when the conditions are right to do
so," he said
Toshiba, which began selling HD DVD players in March 2006,
has sold 1 million players and recorders. But this month it
declared it would quit the technology after a bitter battle
against Sony Corp's (6758.T) rival Blu-ray, which won more
studio and retail support.
In August, Viacom Inc's (VIAb.N) Paramount Pictures and
DreamWorks signed exclusivity deals to distribute
next-generation films on HD DVD for the next 18 months.
Shortly afterwards, the New York Times reported Viacom
executives with knowledge of the deals said Paramount and
DreamWorks would get a combined $150 million in financial
incentives for their commitment to HD DVD.
DreamWorks plans to release the DVD version of "Bee Movie"
next month and is waiting to hear back from Toshiba on how to
proceed.
"We said, we have a release coming up on 'Bee Movie.' What
would you like us to do?," Katzenberg told Reuters in an
interview.
JP Morgan analyst Barton Crockett said the Blu-ray market
was still small although he expected DreamWorks would like to
have the issue settled by the 2008 holiday season.
"It might mean they'll lose the opportunity to sell 'Bee
Movie' on Blu-ray, although the market for Blu-ray is still
pretty small and the offset is that they'd get money from
Toshiba, which may in fact be more," Crockett said. "But I'm
sure they'll like to have this settled by Christmas."
Other HD DVD-backing studios like General Electric Co's
(GE.N) Universal Pictures said this month they will switch to
Blu-ray after Toshiba officially pulled the plug on HD DVD.
(Editing by Braden Reddall)
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