Paramount (Viacom) to buy DreamWorks
Paramount Studios reached a deal to buy out DreamWorks SKG, the film studio. It reportedly snatched the company away from Universal Pictures (a division of General Electric), which had nearly hammered down a deal with DreamWorks. Paramount won with a bid of around $1.5 billion.
Note that the production studio of DreamWorks Animation SKG, the division that makes features like the Shrek movies and Shark Tale, is not included in the deal. That group is now a separate company. The acquisition includes the DreamWorks film library, which is small (only 60 titles) but has some major films (Gladiator, Minority Report, Saving Private Ryan), many of them directed by Steven Spielberg.
The move is surprising, in that it happens just as Paramount and other assets are being spun off by Viacom as a separate company from a core group headed by CBS. Most observers counted Paramount out, as assembling that amount of cash with a complex demerger in the works.
Paramount, not long ago the studio of such megahits as Titanic and Forrest Gump, has been a slump for the last three years. As a Wall Street Journal article ("Paramount to Buy DreamWorks", 12/10/05) puts it,
For Paramount, the deal is badly needed for its movie-studio turnaround. Viacom replaced Paramount's management team earlier this year and tasked Mr. Grey with reversing the studio's poor results. The studio's slate for next year is thin, and a deal to buy DreamWorks will not only give it live-action movies but also the right to distribute animated films from the separate, publicly traded DreamWorks Animation SKG, home to the "Shrek" franchise.
DreamWorks was founded in 1994 by a "dream team" of entertainment players, especially director Spielberg. The idea was to provide innovation in a wide swath of media, including TV, movies, music and the Web. According to an L.A. Times article ("Paramount Reportedly Set to Buy DreamWorks", 12/10/05): "But the partners soon abandoned plans for a sprawling studio campus at Playa Vista. And eventually, DreamWorks sold off its money-losing music label, all but shuttered its television production studio and ditched its ambitious plans for Internet and video game ventures."
This deal reduces the number of serious Hollywood studios to six (owned by media giants GE, Sony, Viacom/Paramount, Disney, Time-Warner, and News Corp.) The last consolidating move was Sony's 2004 purchase of MGM.
While DreamWorks didn't always produce good films, it was more innovative than the bigger, more bureaucratic studios were. While Spielberg will be able to make his films wherever he wants, some of the less blockbuster-oriented films are unlikely to get the green light from the tightened movie studio oligopoly.
