Heya, just picked this up at USATODAY.com Paramount to buy DreamWorks for $1.6B (By Alex Armitage, Bloomberg News)
LOS ANGELES — Viacom's Paramount Pictures agreed to buy DreamWorks for $1.6 billion in cash and debt, wresting the movie studio away from NBC Universal and securing the talents of Steven Spielberg.
DreamWorks will almost double Paramount's slate of films for 2006. Los Angeles-based Paramount is in talks to sell DreamWorks' library of 59 movies including Gladiator, according to a statement Sunday from both companies.
The purchase is a coup for Paramount chief Brad Grey, hired this year by Viacom Chairman Sumner Redstone to revive the studio. Paramount, ranked sixth at the box office this year, won DreamWorks with an 11th-hour bid that beat out General Electric's NBC. DreamWorks founders Spielberg, Jeffrey Katzenberg and David Geffen are handing over a business formed 11 years ago with a vision to pool their talents in film, animation and music.
Paramount is "looking to shake things up and muscle things up," said Adi Kishore, director of entertainment and media research at Boston-based Yankee Group. "This is being driven by the new leadership."
The deal includes a worldwide distribution agreement with DreamWorks Animation, beginning in 2006. Paramount will get exclusive rights to future DreamWorks' Animation characters in television shows, the company said.
While Glendale, Calif.-based DreamWorks found success with Oscar winners including Saving Private Ryan and American Beauty, films this year such as The Island disappointed. The company began unraveling in 2000 with the sale of its video-game and music units, abandoning its ambition of forming a conglomerate to rival media companies such as Time Warner and Walt Disney. A sale also enables early investors such as Paul Allen to get some money back.
"The sale of DreamWorks' live-action unit suggests an end to the vision," said Laura Martin, an analyst at Soleil Securities Group in Pasadena, Calif.
Paramount wins distribution rights to films from DreamWorks Animation, a separate company that produced the Shrek franchise and Madagascar.
The sale also gives Paramount the skills of Spielberg, whose hits include Jaws and Schindler's List. The director has long had links to NBC, whose lots he has used to make movies including E.T. the Extraterrestrial. Spielberg is releasing his next film, Munich, through Universal on Dec. 23. Paramount is "getting a library and they're getting the Spielberg name," Soleil's Martin said.
DreamWorks will join Paramount as part of a new Viacom when Redstone splits his company in January. The film studios will be part of business run by Chief Executive Officer Tom Freston that holds New York-based Viacom's MTV cable-television unit.