Paramount To Buy DreamWorks for $1.5 Billion

LATimes.com reports today that Paramount landed a surprise bomb on Hollywood Friday when they successfully made a deal to purchase DreamWorks SKG, the independent movie studio headed by David Geffen, Steven Spielberg and Jeffrey Katzenburg (think Shrek, Gladiator). Feathers are likely to ruffle as NBC Universal had already spent six months pursuing Dreamworks, according to the story.

LATimes.com reports that Viacom's board (parent company to Paramount Pictures) approved a $1.5 billion bid Thursday, provided that outside investors will help finance the deal.

Dreamworks formed about 11 years ago, when director Steven Spielberg, music mogul David Geffen and veteran studio executive Jeffrey Katzenberg got together to form an entertainment company that directly competed with the major studios.

If the acquisition goes through, Paramount would control DreamWorks' non-animation movie production operation (its animation department has already been spun off into 'Dreamworks Animation' for which Paramount would have worldwide distribution rights) and its entire movie library, including "American Beauty" and "Gladiator."

Dreamworks has been an interesting ride. Initially began as a multifaceted studio that would span television, music and movies - however nearly all of its ventures outside of the movie realm failed to produce any significant accomplishments and were mostly sold off (I guess that's why Geffen is the last letter in SKG!)

Paramount is no stranger to working with Dreamworks, but this deal takes it a step further and solidifies some financial ties to Spielburg films, whether they are done with Paramount Pictures or not. The idea is to end the three-year slump that has plagued Paramount of late and get it back into position as a leading studio.

According to the story, by early January Viacom will become two separate, publicly traded entities. The new Viacom will include Paramount, MTV Networks and cable channel BET. The other company, CBS Corp., will be led by Leslie Moonves, and include the CBS and UPN television networks, Paramount Television, Infinity Broadcasting and cable channel Showtime.

The only apparent loser in the deal seems to be NBC Universal. Considering Spielberg had based his production company on the studio's lot for quite some time and the fat that Universal gave him his first break as a young director, the Paramount annoucnement comes as a bit f a shock. Universal Studios is where Spielberg made such blockbusters as "Jaws," "E.T" and the "Jurassic Park" movies.

Read more about it at latimes.com .

Information initially reported by Claudia Eller and Sallie Hofmeister, Times Staff Writers.