Universal, Sony Said to Eye `Dragon Ball' Anime Importer

(Bloomberg) -- Look on Amazon and you'll see why Hollywood studios are eyeing Funimation Productions Ltd.

The anime company's nine-season “Dragon Ball Z” TV series sells for $231, a big sum in the shrinking DVD market. The complete “Seinfeld” goes for $55. Funimation is also U.S. distributor of films like the Japanese animated feature “Your Name,” which has generated $354 million in theaters worldwide since its April release.

Both Comcast Corp.'s Universal film division and Sony Pictures have weighed bidding for Funimation, a big U.S. player in Japanese-style animation, people close to the situation said. Universal, which has a multiyear deal to distribute Funimation's DVDs, looked and decided not to proceed, said one of the people, who asked not to be named discussing internal matters. A separate Sony Corp. unit is a partner in the company's streaming business.

Their interest highlights the pressure in Hollywood to find fresh material with a loyal fan base and the potential to become a multibillion-dollar film franchise. Funimation licenses anime and dubs the products into English. The company has something any Hollywood studio would relish these days: a growing theatrical and home-video business.

“Funimation has experienced annual double-digit revenue growth since 2013 for both our digital and physical collectible business despite industry trends in physical disc sales moving in the opposite direction,” Mike DuBoise, the company's chief operating officer, said in an interview.

Total video-disc sales in the U.S. slumped almost 10 percent last year, declining to $5.49 billion, according to the Digital Entertainment Group, a studio-backed trade organization.

Management Focus

Funimation, based in the Dallas suburb of Flower Mound, confirmed in a statement it has received and weighed unsolicited interest from a variety of companies.

“The Funimation management team is more immediately focused on continuing to create compelling experiences for anime fans through physical, digital/streaming and theatrical efforts with goals of continuing to expand globally and maximizing shareholder value,” the company said.

Japanese emigre Gen Fukunaga started Funimation in 1994 to license, dub and market anime. The company enjoyed success late in the '90s with “Dragon Ball Z” on the Cartoon Network. It changed hands a couple times and in April 2011 was sold to a group that included Fukunaga, the current chief executive officer, and two Texas investors: tech billionaire Darwin Deason and John Kuelbs, a former Teledyne executive. DuBoise is a former Universal executive.

Funimation today has expanded into streaming via FunimationNow and theatrical distribution, through Funimation Films, which acquires anime and live action titles for U.S. audiences. The company recently teamed up with Lions Gate Entertainment Corp. to release the original anime behind the Paramount Pictures feature “Ghost in the Shell” starring Scarlett Johansson.

Funimation generates more than $100 million in annual sales, with growth exceeding 10 percent a year since 2013, according to a spokesman. Because anime fans are collectors, Funimation has a growing DVD business.

In July 2015, it launched a streaming service with 10,000 hours of content. FunimationNow costs $5.99 a month and has just expanded into New Zealand and Australia. The service was built in partnership with Sony DADC, the disc and digital distribution arm of Sony Corp. The company has 200 full-time staff, from Texas to New York to Japan. It dubs an average 23 anime series a week out of its Texas studio and is planning to release 80 episodic anime series through the service this year.

In September, the company signed a deal to supply anime videos to Crunchyroll, a streaming service focused on Asian animation. It's owned by Otter Media, a joint venture between AT&T Inc. and media executive Peter Chernin.

To contact the reporter on this story: Anousha Sakoui in Los Angeles at asakoui@bloomberg.net.

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Rob Golum