Los Angeles - Paramount Pictures has agreed to buy independent film studio DreamWorks SKG for nearly $1 billion (R6.35 billion) cash in a deal designed to help both companies reverse their troubled fortunes.
The sale on Sunday marked the end of an 11-year dream for Hollywood moguls Steven Spielberg, Jeffrey Katzenberg and David Geffen, who had ambitious goals for DreamWorks that once included television, music, films and the internet.
The acquisition was seen as a critical gambit for Paramount, which has been under orders from parent company Viacom to improve the quality of its movies and earnings.
Paramount would pay $775 million in cash and assume $825 million in debt and other obligations, the company said.
"We see this at Paramount as a transforming event for the studio," said Brad Grey, Paramount's chairman and chief executive.
The studio would finance the deal by selling the DreamWorks film library, which Paramount values at between $850 million and $1 billion. The company said it was in advanced talks and expected to have a deal within weeks.
DreamWorks would retain some of its independence. It plans to make four to six films a year that Paramount would distribute under the DreamWorks banner.
Paramount would retain distribution rights to the 59 library titles, which include the Oscar winners American Beauty and Gladiator.
The agreement did not include DreamWorks Animation SKG, which was the most profitable part of the firm.
The animated unit went public last year. Paramount does gain the right to distribute the animated studio's lucrative films for the next seven years, including the profitable Shrek franchise. The film studio would also have the right to make television shows using DreamWorks Animation characters.
Upon completion of the deal, expected to close early next year, Paramount would sign new employment agreements with Spielberg as a producer and director, and Geffen, who would become chairman of DreamWorks. Spielberg and Geffen would be responsible for producing four to six live action films a year, Paramount said.
Paramount put its offer together just last week, after DreamWorks had been discussing terms with NBC Universal, a unit of General Electric, for nine months.
NBC Universal made an offer in September, then reduced it at the last minute. That angered Geffen, who said he was still talking to NBC Universal as late as Friday before accepting the Paramount offer.
"We tried very, very hard to conclude a deal with General Electric, which we were never able to do," Geffen said. Geffen said Paramount was able to produce completed contracts within a week, something General Electric never did.
A deal with NBC Universal had been considered more likely because of Spielberg's long ties to Universal, which gave him his first jobs directing television shows and eventually feature films.
- Sapa-AP