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NEW YORK (TheStreet) -- Shares of movie and television show producer DreamWorks Animation (DWA) are rallying after The Hollywood Reporter stated yesterday that the company is in talks to be acquired by Japanese telecom company Softbank (SFTBF) , the parent of U.S. wireless carrier Sprint (S) .

WHAT'S NEW: Softbank is negotiating to buy DreamWorks for $32 per share, or $3.4B, The Hollywood Reporter said, citing an unnamed source. DreamWorks' board held an emergency meeting on Thursday to consider the offer, the website added. However, according to CNBC's David Faber, the talks between the companies are only in early stages and "may go nowhere." The entertainment industry publication Variety also stated that an unnamed Softbank source said it was true that the companies were in contact, but that the likelihood of a deal actually happening is "slim.”

WHAT'S NOTABLE: On September 19, The New York Post reported that Softbank would look to spend some of the proceeds it obtained from the Alibaba (BABA) IPO on acquisitions of Hollywood assets. Softbank held talks with four movie studios, including DreamWorks and Lionsgate (LGF) , the newspaper added at that time.

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ANALYST REACTION: In a note to investors today, Wunderlich analyst Matthew Harrigan wrote that DreamWorks is heavily involved in developing Asian content, as its Oriental DreamWorks venture will co-produce Kung Fu Panda 3 and it has a significant consumer product business on the continent. Softbank could use DreamWorks' characters to brand and market its mobile services, added Harrigan. Meanwhile, the valuation at which Softbank is reportedly considering buying DreamWorks would imply that Lionsgate, another movie maker, would be worth $44-$67 in a takeover deal, the analyst estimated. Lionsgate has a much more consistent and broader business than DreamWorks, but animation, in which DreamWorks specializes, is more attractive for the Asian market and for marketing purposes, Harrigan believes. He kept a $37 price target and Buy rating on Lionsgate. The analyst does not cover DreamWorks.

PRICE ACTION: In early trading, DreamWorks surged 17% to $26.12, while Lionsgate gained 2.8% to $32.06.

Reporting by Larry Ramer.

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