Moving
swiftly after negotiations bogged
down with a rival, Viacom
Inc. closed a deal on Friday
to pay $1.6 billion for DreamWorks
SKG, the Hollywood studio
founded by Steven Spielberg, Jeffrey
Katzenberg and David Geffen, according
to an executives involved in the negotiations.
Viacom
and its studio division, Paramount
Pictures, sealed the acquisition
at a meeting on Friday between Mr.
Geffen, Mr. Spielberg, Tom Freston,
Viacom's chief executive,
and Brad Grey, Paramount's
chairman. More than half of the money
will come from private equity investors,
the executives involved in the talks
said, and the price includes the assumption
of about $400 million in DreamWorks'
debt.
DreamWorks
had been in advanced talks with General
Electric's 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.
Shortly thereafter DreamWorks
confirmed the purchase by Viacom.
For
Paramount, the move
is a logical one. Mr. Grey recently
took charge of the studio and it 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, though one of those
includes a film co-financed with Paramount,
the musical, Dreamgirls."
The
Paramount purchase
also provides a new home for Mr. Spielberg,
one of the most powerful and prolific
directors in Hollywood, whose Amblin
Productions is located on
the Universal lot.
Mr. Spielberg is not required to make
his movies at DreamWorks,
but he has generally made DreamWorks
a partner on his projects. These included
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. His
presence at Paramount
would lend the studio his great prestige.
Paramount
and Universal recently
dissolved the international distribution
company, UIP, that
they owned jointly, which distributed
films by DreamWorks
and DreamWorks Animation,
the animation division recently spun
off as a public company. Until each
company can build separate international
distribution companies, Paramount
and Universal have
divided up various countries for distribution
of DreamWorks films,
but the prospect of losing this distribution
income made DreamWorks
an enticing purchase for either company.
The
board of Viacom on
Thursday approved the purchase of
DreamWorks. Last
fall, the board rejected a request
by Paramount executives
to open negotiations with DreamWorks.
The difference this time was that
private investors would share the
risk of the purchase, said several
people close to the company.
The
final private equity partners have
not yet been determined, said an executive
at Paramount, added
that several firms were interested.
The Quadrangle Group,
an investment firm that specializes
in media, is a likely contender. Quadrangle
declined to comment.
The
executive close to the talks said
that private equity investors would
put up $800 million to $1 billion,
while Viacom would
put up $600 million to $700 million.
This
offer trumps a previous bid by NBC-Universal,
which had been in serious negotiations
with DreamWorks since
mid-October. But Universal
had been offering far less for DreamWorks,
$700 million plus an assumption of
an estimated debt of $400 million,
according to an executive close to
those talks.
For
months Universal
had been the only suitor wooing DreamWorks,
which many in Hollywood and on Wall
Street considered a logical fit. Universal
co-financed movies with DreamWorks
and had a lucrative agreement to distribute
all of DreamWorks'
DVD's and theatrical movies worldwide,
which added millions of dollars to
Universal's bottom
line.
Source:
NYTimes
FOXNews.com
published the following "theory"
about Paramount buying
DreamWorks and the
upcoming fourth Indiana Jones film.
But
Universal may have
guessed the obvious: Spielberg's
next movie, Indiana Jones
4, certain to be a mega
blockbuster, is parked at Paramount
— something not lost, I am
certain, on the Paramount/Viacom
execs. By buying Dreamworks,
Paramount secures
Spielberg and reaps all benefits
of working with him. If Indy
4 is made, and is indeed
a $500 million hit, the Dreamworks
price tag won't look so bad.
I
am not sure what's going to happen
with the name DreamWorks,
whether it will stay or go away. We
will have to wait and see for that.
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