Published:
27-Oct-08
As anticipated, Universal is to take over theatrical and home entertainment distribution of content from DreamWorks, following the latter's split from Paramount in January 2009. Links between the two studios are strong; they were distribution partners prior to Paramount parent Viacom's acquisition of DreamWorks and even after that deal DreamWorks principal Steven Spielberg maintained his production offices on the Universal Pictures lot. Under the terms of the seven-year agreement Universal will receive an eight per cent distribution fee, in line with Paramount's fee for distributing DreamWorks Animation product—a separate arrangement that is set to continue until 2012. Universal will also provide $150m in back-up funding for the new DreamWorks venture, although this will reportedly only be activated if other funds—$550m from India's Reliance Big Entertainment and up to $750m in bank loans arranged by JP Morgan Securities—are exhausted.
Our take...
Although historic and personal links between DreamWorks and Universal mean the move was expected, both Fox and Disney are understood to have expressed interest in taking on DreamWorks' slate of around six movies a year. Exact details of who will distribute what are still emerging, but the first Universal-distributed DreamWorks titles are not expected before 2010. Paramount retains distribution rights to several DreamWorks titles developed during their three years together (including The Soloist and Transformers 2) and also has an option to co-finance and co-distribute 12-20 other DreamWorks-led projects. The Viacom-owned studio also benefits from sequel and remake rights to all titles distributed by it for DreamWorks. Meanwhile, Spielberg is understood to have the option of producing or directing any DreamWorks project developed at Paramount, for a guaranteed 7.5 per cent of the gross. Universal, meanwhile, has stated that it does not plan to reduce its own production levels (currently around 28 titles annually) to make way for the new DreamWorks slate but will increase its output, bucking the general industry trend.
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