More than three months after the WSJ first broke news that DreamWorks was in the midst of doing a deal with Reliance to ditch Viacom, the deal has finally closed.
Huh, guess that whole credit crunch thing cleared up this week. (We must’ve missed that.)
Nonetheless, now it’s only a matter of time before the studio links up with a new distributor (probably Universal) and flees the Via-coop, David Geffen first.
See ya later, Sumner!
WSJ: The principals of DreamWorks SKG have completed a long-anticipated deal with one of India’s largest entertainment conglomerates to set up a new $1.2 billion film company, according to people familiar with the matter.
The deal gives DreamWorks co-founder Steven Spielberg and his team the financial support they need to leave Viacom Inc.’s Paramount Pictures and start a new venture. Under the signed agreement, Mumbai-based Reliance ADA Group will invest $500 million equity and provide another $700 million in debt through J.P. Morgan Chase & Co. toward the new venture, which will produce a slate of about six films a year.
News of the talks between DreamWorks principals and Reliance first surfaced in June, but an agreement wasn’t finalised until now, these people said. The new company will be headed by Mr. Spielberg and DreamWorks Chief Executive Stacey Snider…
Even after Mr. Spielberg and Ms. Snider depart Paramount, they will continue to work with the studio on a number of movies. The two parties share rights to many projects, including upcoming “Transformers,” a sequel to the blockbuster hit. While it was once thought that the DreamWorks team would try to take some projects with them to the new venture, it is now more likely that those films will remain at Paramount, with Mr. Spielberg receiving rich compensation for his involvement.
UPDATE: Paramount press release courtesy of Nikki Finke:
“We congratulate Steven, David and Stacey, and wish them well as they start their newest venture. Steven is one of the world’s great story-tellers and a legend in the motion picture business. It has been an honour working closely with him and the DreamWorks team over the last three years and we expect to continue our successful collaboration with Steven in the future.”
“To facilitate a timely and smooth transition, Paramount has waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company without delay.”
“The acquisition of DreamWorks has been beneficial both creatively and financially for Paramount and accelerated our strategy of focusing on our world-class franchises and brands. It gave us a solid slate of films to fill out our lineup, a valuable catalogue we were able to monetise, and a development pipeline that will bear fruit for us for years to come. The acquisition jump-started our rebuilding plans, which are now well underway and include promising upcoming releases such as Star Trek by JJ Abrams, G.I. Joe by Stephen Sommers, Transformers 2 by Michael Bay, David Fincher’s The Curious Case of Benjamin Button, and Jon Favreau’s Iron Man 2, among many others.”
UPDATE 2: More on the deal from everyone else (and their mother’s newspaper) who wrote about it since the news broke.
THR is heavy on the details:
Financial execs from Los Angeles to Mumbai were faxing paperwork late Friday morning to finalise Steven Spielberg’s deal to secure at least $500 million in funding from Reliance Big Entertainment.
The faxing of signatory documents followed a figurative handshake agreement over the deal Thursday night. In a related transaction, JPMorgan securities will lead a bank loan syndication giving Spielberg another $500 million or more for a total $1 billion-plus to re-create DreamWorks as a private company.
So JP Morgan is syndicating $500 million on more in debt, which, incidentally, is less than the WSJ’s reported figure of $700 million…Hmmm…Furthermore, THR’s wording suggests the debt hasn’t been syndicated yet, which is always the tricky part of these deals, as Paramount knows all too well.
Spielberg, DreamWorks chairman David Geffen and DreamWorks chief exec Stacey Snider could [tender their resignations from Paramount] as early as Friday.
Probably next Friday, not today.
Nikki Finke’s Paramount sources tell her that DreamWorks informed Paramount that the deal was done within the past 24 hours. Which explains why today, Paramount basically said Spielberg, Geffen and co. could leave at any time. Specifcally, they “waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company without delay.”
Variety clarifies that this means the DreamWorks employees who many previously thought might have been forced to stay at Paramount are also free to go. But that doesn’t necessarily mean there’s room for all of them aboard the DreamWorks ship:
It remains unclear which executives DreamWorks will take with them to their new venture. It is unlikely the new company will keep its current roster intact given that it will be working under a tighter budget.
Finally, practically everyone who’s reported on this deal over the past few months has noted that David Geffen has said he wants out of the movie business, which begs the question: “What’s he going to do now?”
See Also: Why Is This DreamWorks-Reliance Deal Taking So Long?
Viacom Boss Dauman Looking Forward To Losing Dreamworks: We’ll Save Money on Marketing, Overhead
Spielberg Working Magic: DreamWorks Close To Deal To Ditch Viacom
DreamWorks-Reliance Deal Hostage To Credit Crunch
Spotted: DreamWorks, Universal Execs Dining Together
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