DreamWorks, Universal strike deal
Distribution pact covers six films per yearORLANDO -- Steven Spielberg is back in the Universal family.
DreamWorks, headed by Spielberg and Stacey Snider, has struck a much-anticipated deal for theatrical distribution with Universal Studios in a seven-year agreement encompassing as many as six releases a year. The first project under the pact should go before cameras by September for release in 2010.
Terms call for DreamWorks to pay Universal an 8% distribution fee, with Uni advancing the marketing costs of the films.
Spielberg and Snider recently bolted Paramount to reconstitute DreamWorks as a private, separate production company. Several projects under development at Paramount will exit with them, but several DW/Par co-productions are likely during the next couple of years from among a batch of 33 key projects that DreamWorks had in development at Paramount.
The new DreamWorks' planned financial backing includes $550 million from India's Reliance Big Entertainment, bank loans of up to $750 million administered by JPMorgan Securities and $150 million in backup funding by Uni in the form of a callable bond that would be drawn upon only if other funds were exhausted.
Uni will handle worldwide distribution except for India, which RBE will oversee, and any DW/Par co-productions are likely to see global distribution shared with Uni.
Disney and Fox were also eyed as possible distribution partners for the new DW, but Uni was always the prohibitive frontrunner. DreamWorks production offices remained in leased space on the Uni lot even after Par acquired the company in March 2006.
The Reliance portion of DreamWorks' financial package is in place and could be augmented at some point. Execs won't get going in earnest on the bank component to the start-up's financial package until next month because of the turbulence in the financial markets. The aim is to close on the bank syndication and related lender commitments in January.
DreamWorks principal David Geffen is helping to fashion the latest iteration of the company but will not be involved once the new DW is up and operating.
As a young filmmaker, Spielberg's first contacts with Hollywood took place on the Universal lot, where he eventually rose to prominence as the director of "Jaws" and "E.T.: The Extra-Terrestrial." And Snider ran Universal Pictures as its chairman before joining DreamWorks two years ago.
"Universal has always been my home base, so this agreement starts a new chapter in what has been a long and successful association," Spielberg said.
Universal Studios president and COO Ron Meyer added, "We couldn't be more pleased to welcome the DreamWorks team back to Universal."
"Steven and I are so excited to reunite with such excellent partners and friends at Universal," Snider told The Hollywood Reporter. "And we would never even be in this position were it not for David Geffen's efforts."
"I'm happy to have her back -- it's such an easy, comfortable, familiar relationship," Universal Pictures chairman Marc Shmuger said of Snider's return to the studio, which he oversees with co-chairman David Linde. "We know her taste in movies and her sensibilities as applied to marketing and distribution, so we'll all be able to get up to speed really fast."
The DreamWorks duo now will be part of a broader Uni family that also includes Beverly Hills-based Imagine Entertainment, the U.K.'s Working Title and Uni's own specialty division, Focus Features.
Currently, Uni releases about 18-20 titles domestically per year, plus another six films go out through Focus and another four from genre label Rogue.
"As DreamWorks fully ramps up, we'll figure out ways to make room," Shmuger said. He discounted any talk that the DreamWorks product would crowd out Focus or Rogue.
The deal could have even more impact on Uni's fortunes as an international distributor now that it has its own foreign distribution system. "Worldwide distribution was an underlying object of the deal on all sides," Shmuger said.
DW is likely to boast a work force of just over 100 when fully reconstituted, down from 140 or so including television operations and other units not in the immediate plans for the new company.
"We're ready to get started," Snider said. "We'll be phasing in the employees between now and January."