Paramount buys DreamWorks for 1.6 billion dollars

Paramount film studios, part of Viacom, has purchased DreamWorks, makers of "Shrek" and "Madagascar" for 1.6 billion dollars in cash, the company said.

Paramount

DreamWorks SKG, which created successful computer animated features such as "Shrek," was also sought after by NBC Universal, a unit of General Electric.

"In nine months we were never able to get an agreement GE," said David Geffen, one of the founders of DreamWorks, during a telephone conference call.

The final deal gives Paramount access to 59 films in DreamWorks' library, including "Gladiator," "American Beauty," "War of the Worlds," "Saving Private Ryan," and "Catch Me if You Can."

Paramount plans to sell off the catalogue, according to the company, for somewhere between 850 million dollars and one billion dollars, said Brad Grey, without revealing the names of possible buyers.

DreamWorks Animation receives 75 million dollars to pay off debt. No details of the full amount of debt were revealed, but Wall Street last week put the amount at some 500 million dollars.

"We were never able to produce enough films to make it economically sound," Geffen said.

"Now we'll be able to produce films at much less costs," he said.

Geffen said that with few exceptions the approximately 500 employees of DreamWorks will stay on the job or will take similar jobs with Paramount.

Paramount takes over all of DreamWorks' current projects and creates an ongoing partnership with Steven Spielberg, who has directed some of DreamWorks' most successful films.

Spielberg and Geffen are to produce four to six live-action films per year of the 14-16 films Paramount said it expects to make next year.

DreamWorks Animation also announced that it had struck a seven-year deal to distribute its films in theaters, television and home DVD and video players worldwide.

The agreement was conditioned on Paramount's purchase of DreamWorks.

"We are pleased with the benefits this new relationship provides DreamWorks Animation," stated Jeffrey Katzenberg, chief executive of DreamWorks Animation and formerly of Walt Disney studios.

DreamWorks Animation will also be able to collaborate on new television programming owned by Paramount's parent company, Viacom, including Nickelodeon, MTV, Nick at Nite, VH1, BET, TV Land, and Comedy Central.

"Over the past decade, DreamWorks Animation has produced some of the industry's most successful movies," said Brad Grey, chief executive of Paramount Pictures Group.

The deal will be completed in the first quarter of 2006, Greffen said.

DreamWorks SKG carries the initial of its founders: Spielberg, Katzenberg, and Geffen, who made his fortune in the recording industry by producing the band Nirvana.

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