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Dreamworks Purchased

Published December 12, 2005 in Movie Industry
By Ryan Parsons | Image property of CanMag.Com
Dreamworks Dreamworks up for sale.
DreamWorks Entertainment, which has produced such Oscar-winning films American Beauty, Gladiator and Shrek, decided a while back that their pockets are just not deep enough to compete in today's Hollywood. Therefore, Steven Spielberg, David Geffen and Jeffrey Katzenberg decided that their next best option, besides filming future films, was to put Dreamworks up for sale.

It was first expected that NBC Universal would announce the purchase of the decade old company but, after negotiations fell through, Spielberg decided that filming Munich was more important than being hassled by perspective buyers. It had been suggested that up to $1 billion dollars were on the table for the company, but Universal went through a bit of a buyer's remorse and thought they could negotiate the price down more.

Now, only two months after Spielberg gave Universal the finger, Paramount Pictures has stepped up to the plate and will purchase Dreamworks for the originally suggested $1 billion price tag. Whoa!

Dreamworks Hands Over to Paramount

According to AP, Paramount Pictures has announced its move to purchase Dreamworks in order to help both studios troubled futures. Dreamworks could not afford to go deeper into debt and Paramount has been looking for a step up on more quality films. As part of the deal, Paramount Pictures will hand over $775 million cash to Dreamworks and also the $825 million in debt and obligations already bestowed on the company.

But how can Paramount afford such a risky endeavor? Well, the studio has already got that figured out as well.

Paramount Pictures plans to recover a majority or all of the cash laid down to Dreamworks by immediately selling off the DreamWorks film library, which Paramount values at between $850 million and $1 billion. However, not to give all the best Dreamworks assets away, Paramount plans to hold onto at least 59 film titles that include Gladiator and American Beauty.

Though it looks like Paramount Pictures may win big in this deal, the one property they missed out on is DreamWorks Animation SKG Inc.; the most profitable and public part of the company. However, Paramount will now have control of distribution on popular Dreamworks animations including the Shrek franchise.

Considering that DreamWorks has twice escaped bankruptcy, it looks like Spielberg has finally found his way out.

Stay tuned for updates.

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Ryan Parsons
Sources: Image property of CanMag.Com

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