Paramount Set to Buy DreamWorks

Dec 12, 2005  •  Post A Comment

By Jay Sherman and Christopher Lisotta

The closely watched sale of DreamWorks SKG appeared to end last Friday as an 11th-hour bid from Viacom’s Paramount Pictures was poised to win the derby for the live-action studio.

Sources familiar with the talks confirmed that Paramount had in fact struck a deal to acquire DreamWorks after DreamWorks ended months-long negotiations with NBC Universal over a possible deal.

One source said the deal could have been announced as soon as Sunday. No official word had come from either company by Friday afternoon.

Paramount was able to agree to the terms that DreamWorks laid out for a sale, namely a purchase price of between $825 million and $900 million, plus the assumption of $500 million in debt, according to a report in The Wall Street Journal.

NBCU had been in exclusive discussions with DreamWorks-whose principals are Steven Spielberg, Jeffrey Katzenberg and David Geffen-over the summer, but that exclusivity ended in September amid reports that NBCU was balking at the billion-dollar price tag and was reluctant to give Mr. Spielberg the sort of independence he presently enjoys at DreamWorks.

Officials at Viacom and NBCU did not return calls for comment. A DreamWorks official could not be reached for comment.

For Paramount, the purchase comes at a critical time as it attempts to stage a turnaround. It also comes on the eve of Viacom’s planned split into two publicly traded companies. Paramount will be part of a new company to be called Viacom, which also includes high-growth assets such as MTV Networks.

DreamWorks’ television division currently is based at NBC Universal per a three-year pod deal struck in August 2004. The 2004 deal built on the previous two-year contract between NBC and DreamWorks Television. As part of the deal, DreamWorks is housed on the Universal lot. Justin Falvey and Darryl Frank oversee DreamWorks Television.

DreamWorks co-produces the NBC drama “Las Vegas” with NUTS and the FX drama “Rescue Me” with Sony Pictures Television. The studio also is behind the Mark Burnett reality series “The Contender.”

In November Comedy Central ordered 10 episodes of DreamWorks’ documentary-style improvisational series “American Lives.”

DreamWorks’ first television success was in 1996 with the comedy “Spin City,” which ran on ABC for six seasons. The company’s credits also include “The Job” for ABC, “Freaks & Geeks” for NBC, HBO’s “Band of Brothers,” Sci Fi’s “Taken” and “Into the West” for TNT.