Disney Dreamworks distribution Deal

[JPL]

Disney Dream Works Deal (http://www.cnbc.com/id/29057824/site/14081545?__source=yahoo|headline|quote|text|&par=yahooabout:Tabs)

Disney - DreamWorks Deal?
Posted By: Julia Boorstin
Topics:Movies & Film Studios | Television | Technology | Print Media | Media
Sectors:Technology | Media
Companies:Dreamworks Animation SKG, Inc. | General Electric | Walt Disney Co

CNBC.com
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Big changes are afoot in Hollywood.

Steven Spielberg's DreamWorks [SKG 0.24 --- UNCH (0) ] is no longer going to distribute its films through Universal Pictures [GE 11.10 0.25 (+2.3%) ] ; CNBC's sister company made the official statement today (see below). And I've confirmed that DreamWorks is now in advanced negotiations with Disney [DIS 19.45 0.74 (+3.96%) ] to distribute through its Walt Disney studio. Neither Disney nor DreamWorks will comment but we could get an official statement on the negotiations by later Friday afternoon.

DreamWorks has had a harder time raising additional financing to match the $500 million investment it has from India's Reliance Big Entertainment. With credit markets so tight it's no surprise. Universal's statement implies that Universal simply isn't willing to help out in the financing department to fill that gap.

Spielberg has a longstanding relationship with Universal but in a way a deal with Disney would make a lot more sense right now. Universal's slate of films didn't have much room for four to six additional movies from DreamWorks. In contrast, Disney only makes about 12 movies a year now, so it has room in its distribution pipeline for those additional DreamWorks films. If it happens, Disney gets the additional content, more adult-themed content that balances their family-friendly fare. And DreamWorks get access to Disney's global marketing and distribution machine, and likely some additional financing to fill those gaps. And without Universal in the picture, Disney must have quite a bit of negotiating leverage. But Spielberg is Spielberg, and his films have the kind of track record Disney particularly needs after reporting a quarter with a dramatic drop in its movie business.

I'll keep following this as it develops.

Universal Pictures Statement:"Universal Pictures has ended discussions with DreamWorks for a distribution agreement. Over the past several weeks DreamWorks has demanded material changes to previously agreed-upon terms. It is clear that DreamWorks' needs and Universal’s business interests are no longer in alignment. We wish them luck in their pursuit of funding and distribution of their future endeavors."

[Melanie]

DreamWorks, Disney talk distribution


LOS ANGELES (AP) – Steven Spielberg's DreamWorks SKG production company is in talks to have The Walt Disney Co. distribute six of its movies a year as talks broke down with Universal Pictures, two people familiar with the situation said Friday.

The switch ended the deal that Universal and DreamWorks announced in October and highlighted the difficulty of raising film financing in a credit crunch, even for one of Hollywood's most famous directors.

The people were not authorized to speak publicly about the matter and spoke on condition of anonymity because the discussions were confidential.

Universal, a unit of General Electric Co.'s NBC Universal, said Spielberg's company "demanded material changes to previously agreed upon terms."

"It is clear that DreamWorks' needs and Universal's business interests are no longer in alignment," Universal said in a statement.

Those changes included upfront financing of $250 million, more than the $150 million backup loan Universal had earlier agreed to if other financing ran out, one person said. DreamWorks also had sought to have its films occupy six slots a year in an arrangement in which Universal would receive payments from Time Warner Inc.'s pay TV channel HBO for the right to show its new release movies, the person said.

Movie distribution deals usually involve a studio paying for film prints and advertising, recouping those costs from ticket sales and then taking a small percentage of sales going forward.

High-profile producers such as Spielberg can also broker deals in which a studio co-finances the cost of production and splits the proceeds after prints and marketing are paid off.

But after the credit crisis delayed DreamWorks' other financing, it sought new terms that Universal was unable to accept, the person said.

In September, DreamWorks announced it was leaving Viacom Inc.'s Paramount Pictures studio with help of funding from Reliance Big Entertainment of India. Paramount bought DreamWorks for $1.6 billion in 2006.

Reliance had agreed to match up to $550 million in loans raised by JPMorgan Chase & Co. to make movies over a seven-year term, but those loans got delayed. The bank is now planning to raise $325 million in a first tranche of syndicated loans by the end of March.

The funding delays meant that last month, Spielberg had to dip into his personal funds to help buy the rights to 17 movie projects that were in development while DreamWorks was at Paramount. Spielberg also has had to cover half the costs of DreamWorks' approximately 60 employees, with Reliance covering the rest.

Burbank, Calif.-based Disney had been trying to distribute DreamWorks films before Spielberg chose Universal last year, partly due to his long relationship with the studio. His offices are still on the Universal lot.

Disney, meanwhile, is seen as wanting to bolster its movie lineup after its studio revenue fell 26 percent to $1.95 billion in the quarter to December, outpacing declines in other businesses.

A Disney spokeswoman declined to comment.

[DizneyFreak2002]

Please remember this is only a distribution deal.. Disney is not buying Dreamworks.. Also, this involves only the live ation movies, not animation, as I understand it.. So don't worry, you won't be seeing Shrek in a Disney park any time soon... Thankfully..

[TinkerbellT421]

Please remember this is only a distribution deal.. Disney is not buying Dreamworks.. Also, this involves only the live ation movies, not animation, as I understand it.. So don't worry, you won't be seeing Shrek in a Disney park any time soon... Thankfully..

Awww I love Shrek :blush: Hmm very interesting. I can see this potentially hurting Universal...maybe a lot. Or am I miss understanding this whole thing? I can see Universal loosing a lot of money, movie wise, with this deal.

[lockedoutlogic]

I think the "K" in Dreamworks SKG is probably pulling whatever hair he has left out if it turns out his baby needs Disney money to survive....which is evidently the case

[JPL]

His Great Great Great Grandchildren will still be eating off Disney's Dollar with all the money he made at Disney before leaving

[lockedoutlogic]

His Great Great Great Grandchildren will still be eating off Disney's Dollar with all the money he made at Disney before leaving

you're thinking of Ovitz

[JPL]

Katzenberg walked away from Disney a very wealthy man as well. And remember like most of the entertainment world his beef was with Eisner more than Disney as a whole.

[lockedoutlogic]

Katzenberg walked away from Disney a very wealthy man as well. And remember like most of the entertainment world his beef was with Eisner more than Disney as a whole.

that was sarcasm.....i'm familiar with Katzenberg

[Tekneek]

Katzenberg wasn't a bad guy, from what I recall. He felt betrayed by Eisner, and so he left when he had a good opportunity. I wouldn't really begrudge anyone for doing that.

[caryrae]

By Anthony Breznican, USA TODAY
Steven Spielberg has found a home in the Disney castle.
The filmmaker's DreamWorks Studios, in the market for a larger company to help support and distribute its films, worked out a deal Monday to partner with The Walt Disney Co. after an abrupt split with Universal Pictures late last week.

Terms of the deal were not disclosed, but this enables Spielberg and partner Stacey Snider to move ahead on a number of scripts awaiting the go-ahead. They made such films as Transformers, Disturbia and Tropic Thunder at their former home, Paramount Pictures. Spielberg recently spent about $27 million to buy back projects that were being developed there for a new incarnation of DreamWorks.

The arrangement does not include DreamWorks Animation, maker of the Shrek and Madagascar films, which broke off on its own as a separate company — and is a rival to Disney and its partner Pixar.

Disney officials said they would be releasing about six DreamWorks films a year, and the first one would likely be in 2010. DreamWorks officials hope to begin rolling on their first new live-action film this summer. The details of the first projects have not yet been revealed.

Spielberg had initially been enthusiastic about partnering with Universal, which made his early hits Jaws and E.T. the Extra-Terrestrial. But the worldwide economic woes tied up outside financing he and Snider aligned, and attempts to rework the deal failed.

Universal's sudden announcement that it was finished with DreamWorks was a rare flash of hostility in Hollywood, where happy endings in business deals are often as forced as they are in the average romantic comedies, and even breakups occur amid smiling faces.

The troubled talks with Universal led DreamWorks to Disney, one of its original suitors.

"Disney is the birthplace of imagination," Spielberg said in a statement, adding that the company appealed to DreamWorks because it has one of Hollywood's best operations for reaching out to a worldwide audience.

The arrangement also benefits Disney, which has had trouble in recent years developing grown-up fare such as Sweet Home Alabama, Unbreakable and The Royal Tenenbaums.

Bob Iger, Disney president and CEO, praised DreamWorks' "creative and commercial track record" and said Spielberg's "artistic vision and commitment to quality filmmaking are legendary."