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Dreamworks’ CEO Jeffrey Katzenberg is in trouble with the Securities Exchange Commission again over delayed writedowns. Ironically, this time it is a writedown following the making of Turbo, a movie about the world’s fastest snail, but Dreamworks took its time, seven months in fact, before it finally announced a writedown of $13 million on the film, and in late July, it revealed that the SEC had begun investigations. After each announcement, the stock shed 12%, although Katzenberg sold a sizeable amount of stock in October and November at $27.84 and at $32.17, much higher than the stock’s level around $20 now. The SEC is probing the timing of the sale of shares and the reason for the delay in the writedown.
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In the past, Dreamworks has been quicker to write down less-than-successful films, usually in a couple of months, however, this is still slower than the industry average and the issue over Turbo isn’t the first time Katzenberg has landed in hot water with the SEC. In 2005, when Dreamworks was a newly public company, Katzenberg had to cancel a secondary offering, was faced with class action lawsuits and was investigated by the SEC. Critics say it doesn’t seem reasonable that the company should have so many delays with writedowns, given that it only releases two films a year.
