CinemaTech
[ Digital cinema, democratization, and other trends remaking the movies ]

AD: Fans, Friends & Followers

Monday, December 12, 2005

Inside the DreamWorks/Paramount deal


Sharon Waxman has an inside look at the $1.6 billion sale of DreamWorks SKG to Paramount/Viacom. The acquisition was officially announced yesterday.

    "This for Paramount is a new beginning," Mr. Grey said in an interview on Sunday. "I think it's going to turn this studio into a dynamic and vibrant studio again. This studio is 100 years old, there have been extraordinary years. We happen to be in a cycle that needs a new architecture. This is going to go a long way in that strategy." (That's Mr. Grey at right.)

Analysis of the deal in the Journal is a bit better, I think, focusing on how GE and NBC Universal (who lost out) pursued a more buttoned-down, numbers-oriented approach, while Paramount and Viacom were more relationship-oriented and willing to take risks. Merissa Marr, Kate Kelly, and Kathryn Kranhold write:

    Some analysts have questioned whether a small studio with a mere 60 titles in its library is worth so much. Mr. Spielberg, who founded DreamWorks with David Geffen and Jeffrey Katzenberg, extracts a high price for his services as a director and a producer. DreamWorks's recent track record is dotted with bombs such as the $126 million "The Island," which sold $36 million of tickets domestically.

    Nevertheless, Viacom's 11th-hour steal epitomizes the reasons why Hollywood can be a difficult place for a management-intensive company like GE to succeed. In a movie industry that values relationships and high-stakes bets, industrial and financial behemoth GE puts a premium on rigid return-on-investment calculations and a deliberate timetable. While Viacom schmoozed Mr. Spielberg and made things easy by not sweating small deal points, neither Mr. Immelt nor NBC Universal Chairman and Chief Executive Bob Wright directly solicited the support of the famous director.

Even Viacom chairman Sumner Redstone got involved, according to the Journal story:

    Mr. Redstone says he picked up the phone at his Los Angeles residence and made calls to Mr. Spielberg, Mr. Katzenberg and Mr. Geffen to tell them each how excited he would be for DreamWorks to be part of the Viacom empire. "I told Mr. Spielberg how much I would love him to be the lead director and producer on the Paramount lot," said Mr. Redstone.