DreamWorks Animation (NYSE: DWA), the computer-cartoon studio that competes with the animation product of other entities such as Disney (NYSE: DIS), News Corp. (NYSE: NWS) and Sony (NYSE: SNE), posted Q3 results after the close on Tuesday. Revenues saw a modest decrease of almost 6%, coming in at $151.5 million. I am categorizing a 6% decrease as modest in this case because the studio had a Shrek sequel out in the previous year. The drop was expected. Net income was 41 cents per diluted share, a figure which includes a $0.03 tax benefit. Even so, DreamWorks Animation beat expectations. Wall Street was counting on only 32 cents per share.

Operational cash flow isn't faring too badly. It increased 9%, and the company seems to be doing well enough in terms of generating revenues from its portfolio of films. Kung Fu Panda helped to drive the quarter, but it isn't done yet, as the home-video release should affect Q4 in a most positive manner.

Now that the data is out, DreamWorks Animation is really readying itself for its next big test. Madagascar: Escape 2 Africa, the sequel to the hit Madagascar, is waiting in the wings. In fact, the wait is almost over. The film is due November 7, and the company needs to post big numbers on this one.

Yesterday I half-heartedly went to see the Pixar / Disney (NYSE: DIS) movie "Ratatouille" with my 11-year-old son. To my great surprise it was fantastic. The story, quality of animation and superb writing were cleverly executed. If Pixar continues to produce this highly imaginative level of animation then the first class Walt Disney tradition lives on.

It may appear that the entertainment industry is being diluted, fragmented and slowly surrendering to the Internet via vast amounts of "product" created by amateurs and wannabees, but this is deceiving. The Web has allowed for the immediate distribution of a diverse range of ideas in new media such as YouTube (Google Inc. (NASDAQ: GOOG). It has created a platform to launch what otherwise might be undiscovered talent. But we deceive ourselves if we think this will ever be a substitute for the top talent assembled by Pixar / Disney.

For example, we know that there are more people playing basketball then ever before and they have greater skills too. However, we still pay top dollar and flock to see Kobe and Shaq, even though they now play on opposite coasts. We want to see the best. While the web has proven to be informative, entertaining and democratizing it is not Hollywood. While it has exposed us to new ideas, (and garbage) and provided opportunity to millions of people and new artists, for the most part it is a new delivery system and a new marketing platform. It is not Disney or Dreamworks and it never will be.

Making movies based on long-running television shows is nothing new. Hollywood has cashed in big-time on the Charlie's Angels, Mission: Impossible and Muppets franchises, for example. With The Simpsons Movie however, 20th Century Fox -- a division of News Corp (NYSE: NWS) -- is attempting something different.

Most TV-to-cinema transitions have offered an expansion of the television content, taking the mundane storylines and effects and dramatically upgrading them, giving new dimension and backstory to the characters, pushing them several orders of magnitude beyond their 23" version. The eyeball kicks and surround sound add a thrilling dimension to even the most mundane flat-screen entertainment.

The Simpsons, however, has no such potential. Early reviews have consistently referenced the television-scope frame that the film continues: same characters, same town, same comedy, just more of it. The infusion of famous names wasn't an option to elevate the show beyond the cromulent, either; the show has lampooned, both through cameos and voice doubles, hundreds of the famous and fatuous, from Michael Jackson to Stephen Hawking. Even entering the third dimension wouldn't have broken new ground for the cast, as they invaded both it and the "real" world in my all-time favorite episode, Homer3, a spoof on the math novel Flatland.

This weekend's opening results, then, will be watched with great interest by both the television and movie industry, to see just how low the bar can be set in transitioning content from TV to cinema. I'm guessing the results will be rather disappointing for 20th Century, as moviegoers will want more for their movie D'oh than two hours of Sunday night Fox entertainment.

In the immortal words of Homer S., "Kids, you tried your best and failed miserably. The lesson is: Never try."

Jim Samples has resigned as head of Time Warner Inc.'s (NYSE:TWX) Cartoon Network, following the botched Adult Swim marketing effort that caused a huge bomb scare in Boston.

In a statement, Samples, an affable guy whom I interviewed a few years ago for a feature about Adult Swim for Bloomberg Markets magazine, took blame for the incident. I hope this doesn't lead to further management shakeups.

Adult Swim is small but very weird corner of the Time Warner media empire. One time, the people at Adult Swim hoisted a pirate flag over their building. Samples, whose office was nearby, had to tell them to take it down. These aren't typical employees and Time Warner is smart enough to leave them be for the most part, because the unit's shows are phenomenally popular among young people.

Time Warner's brass has shown enough contrition for the misunderstanding over the marketing campaign for the "Aqua Teen Hunger Force" movie. The campaign was a stupid idea, particularly in the age of heightened security awareness because of worries about terrorism. This certainly wasn't done maliciously.

None of this publicity will hurt the film or Adult Swim's ratings. If anything, it will make the weird cartoons seem even more anti-establishment in the eyes of their target audience.

The Los Angeles City Council has sided with the NFL Network against Time Warner Cable, which has thus far refused to carry the league-owned network. The FCC has already ordered Time Warner Cable to restore at least temporarily NFL Network to previous Adelphia and Comcast customers in Los Angeles.

Time Warner Cable wants to include NFL Network in an additional payment package. NFL Network wants to be included in a basic subscription package in order to reach more subscribers and thus sell more advertizing. The L.A. City Council derives revenue from cable subscribers, but not from satellite subscribers. It doesn't care how the NFL Network is carried, as long as it is carried via cable.

Time Warner Cable has accused NFL Network of jacking up the price per subscriber to carry NFL Network. The network responded that it has increased the number of pre-season games carried, as well as around-the-clock NFL programming. Increased offerings result in increased prices. The city council wants this hashed out before the beginning of the regular NFL season on 7 September.

It was a slow news day for Time Warner, Inc., which is probably a big huge sigh of relief for Dick & Wayne & team. They haven't exactly had an easy couple weeks of it, what with Jeffrey Bewkes criticizing the company's synergistic abilities and Wayne Pace being renamed the "Sugar Daddy." In the absence of news, the stock sighed a bit today, down 13 cents to $17.12 on below-average volume.

AOL released an interesting item yesterday, however, about a new co-branded kids' programming block for Saturday morning cartoons. The partnership, between KOL (AOL's children's brand) and CBS will include some new shows. My favorite concept: a new show based on Dance Dance Revolution with KOL DJ Rick Adams.

From the perspective of a mom with kids: smart move, AOL. I'm embarrassed to tell you how closely my four-year-old son watches the advertisements on his favorite shows, yelling to me while I'm working upstairs, "Mom, come down here so you can see these cool new [fill in blank] I want!" Children will certainly ask their parents to go online with them to KOL. Parents will certainly do so. If AOL can hook them there? That's clickable gold.