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TOPIC: Bye Bye Dreamworks

Bye Bye Dreamworks 11 Dec 2005 17:31 #11514

  • leeler
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http://money.cnn.com/2005/12/11/news/fortune500/viacom_dreamworks.reut/index.htm?cnn=yes

Paramount's DreamWorks come true
Viacom unit agrees to buy Spielberg-founded studio for $1.6 billion, including debt.

LOS ANGELES (Reuters) - Viacom Inc.'s Paramount Pictures said Sunday it has agreed to buy DreamWorks SKG Inc., the movie studio co-founded by director Steven Spielberg, for $1.6 billion, including debt assumption.

The Viacom (Research) unit said the deal gives it DreamWorks' current projects, including Spielberg 's soon-to-be released movie "Munich," a stake in any future films from the iconic director, and worldwide distribution rights for movies from DreamWorks Animation SKG Inc. (Research), maker of computer-animated movies such as smash hit "Shrek."

Paramount further said it is in "advanced discussions" to sell off DreamWorks' 59-title film library shortly after it closes the deal to buy Glendale, Calif.-based DreamWorks, valuing it at between $850 million and $1 billion.

"This means our financial commitment will be substantially reduced," Viacom Co-President andCo-Chief Operating Officer Tom Freston said Sunday on a conference call.

The deal marks the end of independence for one of Hollywood's major film studios, DreamWorks, which was founded 11 years ago by Spielberg, music mogul David Geffen and movie executive Jeffrey Katzenberg.

The pact is a coup for former Hollywood talent manager Brad Grey, who took the reins of Paramount Pictures earlier this year after several recent years in which it has struggled at box offices.

"Paramount will be able to significantly enhance its pipeline of groundbreaking motion pictures -- a key strategic objective in restoring Paramount's stature as a leader in filmed entertainment," Paramount's Chairman and Chief Executive Grey said in a statement.

While Paramount is seeking to sell the film library, it nevertheless wants to retain distribution rights to the films in the catalog, including titles such as "Gladiator," "American Beauty" and "War of the Worlds."

Paramount also bought DreamWorks' television division, which distributes syndicated series "Spin City" and produces "Las Vegas" -- currently airing on NBC.

The film and TV studio further won exclusive rights to populate its TV shows with future DreamWorks Animation characters. DreamWorks Animation was spun off from DreamWorks in 2004 and is now a publicly traded company with Katzenberg running it as CEO.

Under the 7-year film distribution deal with DreamWorks Animation, Paramount will market and distribute the animated films and earn the same 8 percent distribution fee that had been paid to DreamWorks Studios.

The new agreement also provides a $75 million cash payment to DreamWorks Animation that it said it plans to use to repay debt.

DreamWorks had been in on-again, off-again talks with both Paramount and General Electric Co. (Research)'s NBC Universal unit, seeking $1 billion in cash and the assumption of debt.

"Due to my very long history and my loyalty to Universal, I was saddened that after long negotiations and many compromises, we were unable to come to terms with Universal's parent company, GE," Spielberg said in a statement. With Universal, Spielberg produced such classics as "Jaws," "E.T., the Extra Terrestrial," "Jurassic Park" and "Schindler's List."

Viacom is splitting its fast growing cable and film divisions from more mature CBS broadcast and Infinity radio businesses to appeal to different classes of investors.

The company said it expects to complete the split by the end of 2005.

The news of the renewed talks between the two studios first appeared Friday in the Wall Street Journal.

"What a crazy business"
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Re: Bye Bye Dreamworks 11 Dec 2005 19:18 #11515

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Well one less distributor that Technicolor/DHL delivers and one more for ETS.
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Re: Bye Bye Dreamworks 11 Dec 2005 20:05 #11516

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That should eliminate the house allowance that DreamWorks lowered on me earlier this year. I actually liked DreamWorks, but Paramount has the nicest people working for them. They are my favorite. I am happy for them.
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