Film-Tech Forum ARCHIVE: Viacom acquires DreamWorks SKG for $1.6 Billion

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Posted by Aaron Sisemore (Member # 145) on 12-10-2005, 05:39 PM:

Viacom pounces on DreamWorks; Hollywood studio sold for 1.6 billion in a surprise deal

Moving swiftly after negotiations bogged down with a rival bidder, Viacom closed a deal on Friday to pay $1.6 billion to acquire DreamWorks SKG, the Hollywood studio founded by Steven Spielberg, Jeffrey Katzenberg and David Geffen, according to executives involved in the negotiations.

Viacom and its studio division, Paramount Pictures, sealed the acquisition at a meeting Friday between Geffen, Spielberg, Viacom chief executive Tom Freston and Paramount Chairman Brad Grey. More than half of the money will come from private equity investors, the executives involved in the talks said. The price includes the assumption of about $400 million in DreamWorks debt.

DreamWorks had been in advanced talks with NBC-Universal, but told Universal on Friday that if it could not meet Viacom's price, DreamWorks would break off negotiations, according to an executive close to those discussions. A short time later, DreamWorks confirmed the Viacom deal.

For Paramount, the move is a logical one. The studio was recently taken over by Grey, a former talent manager and producer, and still has a relatively thin production slate of 11 films for next year. DreamWorks has nine completed films for release next year, among them "Flags of Our Fathers," directed by Clint Eastwood, although one of the films, the musical "Dreamgirls," was co-financed with Paramount.

Even more important, the purchase gives Paramount the right to distribute domestically and internationally movies made by DreamWorks Animation, the spin-off animation company run by Katzenberg, the maker of "Shrek" and "Chicken Run." That agreement gives Paramount instant clout in the lucrative and growing computer animation business. Paramount will also get DreamWorks' 60-movie library.

A Paramount purchase also provides a new home for Spielberg, one of the most powerful directors in Hollywood, whose Amblin Productions is on the Universal lot.

Spielberg is not required to make his movies at DreamWorks but has generally made DreamWorks a partner on his projects, including the recent "War of the Worlds," and the coming "Munich," about the hunt to assassinate the Palestinian killers of Israeli athletes at the Munich Olympics in 1972.

The board of Viacom approved the purchase of DreamWorks on Thursday. Last autumn, the board rejected a request by Paramount executives to open talks with DreamWorks. The difference, several people close to the company said, was that private investors would share the risk of the purchase.

Posted by Bobby Henderson (Member # 840) on 12-10-2005, 10:21 PM:

This is a surprising development indeed. I thought the whole idea in founding DreamworksSKG was so Steven Spielberg, Jeffrey Katzenberg and David Geffen would have a lot more independence from other Hollywood studios (and to presumably find and develop new talent and new properties).

There's been lots of consolidation between movie studios and media companies. It seems all the major TV networks, movie studios, music recording labels and book/magazine publishers are owned by some greater entity. What movie studios are independent of some other type of ownership?

One can argue much of this consolidation, and its corporate boardroom influence, could be why so many derivative "we've seen this movie 1000 times before" type movies have been made lately.

As the quality of entertainment gets more and more bland, and the number of entertainment providers shrinks, I would like to think that will create a greater opening for new talent to emerge.

Of course that's going to be hard to do through traditional delivery methods (like broadcast/cable TV, movie theaters, video stores). In the long term it may make the wild world of the Internet much more important. Right now bandwidth isn't great enough to break the barriers. But a few years from now I think the entertainment world is going to be shaken up a great deal.

Posted by Louis Bornwasser (Member # 3063) on 12-11-2005, 10:22 AM:

Interesting: this may be the real redeeming feature of Cinema TV (errr. Digital Cinema): anyone, and I do mean anyone may well be able to release his own film since anyone can burn a dvd or its new equal. Louis

Posted by David Stambaugh (Member # 1102) on 12-11-2005, 10:44 AM:

I dunno about it being surprising. $1.6B? Take the money, wait a couple years for your non-compete clause to expire (if there is such a clause in the deal), and start another company. Or don't. If you're Spielberg, you already have the freedom and backing to do any movie you want, with or without Dreamworks. Now you have a much bigger bank account to go with that freedom and you don't have the headaches of running a company.

Posted by Steve Scott (Member # 630) on 12-11-2005, 01:32 PM:

Dreamworks-Paramount-Exxon-Mattel? [uhoh]

Posted by Joseph L. Kleiman (Member # 3097) on 12-11-2005, 02:24 PM:

Amblin-Dreamworks-Paramount-MTV-Exxon-Mobile-Mattel-Electronic Arts