'SHREK' MUSICAL PLANNED.

Byline: Greg Hernandez Staff Writer

PASADENA - The summer animated box office hit ``Madagascar'' will be followed by a sequel in 2008 and there are plans to mount a Broadway production of ``Shrek,'' DreamWorks Animation head Jeffrey Katzenberg said Wednesday.

As of Tuesday, ``Madagascar'' had earned $192 million domestically and $300 million-plus in foreign grosses, giving it a worldwide box office haul of more than $500 million.

DreamWorks has already locked in deals with the film's stars - Ben Stiller, Chris Rock and Jada Pinkett Smith - as well as the original director, writers and producer, Katzenberg said.

Speaking to analysts at the 2005 Merrill Lynch Media and Entertainment Conference, Katzenberg acknowledged the rocky times DreamWorks Animation has experienced during its first year as a public company but painted a rosy picture of the road ahead with, among the future plans, ``Shrek 3'' set for release in 2007.

``It's been a year of learning and I'd like to believe that I'm better for it,'' Katzenberg said. ``Despite some difficulties, so much has been accomplished.''

DreamWorks ran afoul of Wall Street in May when its first-quarter earnings fell well below estimates because the studio was caught off guard by the unexpectedly high number of retail returns of DVD copies of ``Shrek 2,'' even though it has been the biggest-selling home-video title of 2005.

DreamWorks, Pixar Animation Studios and The Walt Disney Co. have all recently cited a shift in home-video sales trends that have resulted in lower-than-expected sales. It has become apparent that new releases of the blockbuster variety are now selling most of their copies during the first three weeks of release, then dropping off precipitously.

Katzenberg said the crowded marketplace that saw 11,000 titles released in 2004 and 6,000 during the first six months of this year could be contributing to the lower sell-through and higher returns.

``It is clear that retail is jammed with product,'' he said. ``Despite changes in the market, we believe we are in the position to maximize (our catalog).''

Katzenberg noted that in the first eight months of 2005, the company had sold a combined 48 million home-video units of ``Shrek 2'' and ``Shark Tale.'' ``Madagascar'' will be released on home video Nov. 15.

``That's a singular achievement that we are very, very proud of,'' he said of the company's 2005 DVD sales.

Katzenberg said DreamWorks has an advantage over rivals in the home- video market because CG-animated films sell many times more than the average feature film.

``They spend a lot of money promoting them,'' observed Ralph Tribbey, editor of The DVD Release Report, an industry newsletter. ``(Computer generated-animated films) are rare and appeal to the kid audience which makes them a multiple viewing event. Kids play the same movie over and over and over again.''

Katzenberg said DreamWorks is moving smoothly forward with its business plan that calls for two new theatrical releases each year and two home-video releases. The studio's next film is ``Wallace & Grommit: Curse of the Were-Rabbit,'' which hits theaters Oct. 7.

As for the stage version of ``Shrek,'' Katzenberg cited the success his former employer The Walt Disney Co. had with Broadway productions of the Disney animated hits ``The Lion King'' and ``Beauty and the Beast.''

``When these things work, they are very, very, very powerful and seemed to go on for a very long time,'' he said.

Greg Hernandez, [phone]

greg.hernandez(at)dailynews.com