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It’s suddenly looking like a two-horse race for DreamWorks distribution rights, but those laurels may come with a more limited payoff than some expect.
Universal holds a big lead entering the derby’s homestretch, with Disney still in the running and Fox now considered further back in the pack. As for terms of any deal to distribute DW films once Team Spielberg has split with Paramount, sources with knowledge of preliminary talks said Monday that the distribution fee could be as low as 8%.
That’s a relatively tiny purse after such a high-profile race. But the winner will be in the Steven Spielberg business, with all the cachet such an association can offer.
By contrast, there’s no almost no chance of Par’s maintaining even a distribution relationship with DreamWorks after its reconstitution as a private company. And that, too, appears more a reflection of relationships — soured ones, in this case, between Par and DreamWorks execs — than any financial considerations.
So less than three years after Par parent Viacom struck a $1.6 billion deal to acquire DreamWorks, the Melrose Avenue studio is about to cut regular ties with its key principals other than on selective future projects for which Spielberg might return as a producer.
Top DreamWorks execs were expected to tender their formal resignations from Par by this morning. The move by Spielberg, DW chairman David Geffen and CEO Stacey Snider follows their alerting Par of the new $1 billion-plus financial arrangement with Reliance Big Entertainment.
The funding — which Spielberg and Snider will use to reconstitute DreamWorks as a private company — was acknowledged by Paramount on Friday in a congratulatory press release. DreamWorks has yet to say anything publicly on the matter.
The DW trio had until Oct. 31 to tender their resignations and trigger escape clauses in their Par contracts. Paramount on Friday said the DW execs would be freed from their contractual obligations immediately — and could take 150 other DreamWorks employees with them.
DW brass may be keeping mum about the various developments to avoid questions about film-distribution negotiations.
Involved parties have been careful to stress that no “formal” negotiations have been held, in deference to contractual obligations of the DW brass while still at Par. But it’s an open secret that a handful of studios have been wooing Spielberg’s representatives for months.
DreamWorks Animation — a separate public company unconnected to the latest DW venture — will likely keep Par as its distributor at least until 2012. Its agreement allows an early exit in 2011, but there would be attendant costs, so DWA insiders say they’re sticking with Par for the foreseeable future.
And why not? DWA pays the studio a distribution fee of just 8%, almost half what’s paid on many distributor-for-hire arrangements.
Many have assumed the new DreamWorks would be forced to pay a bit more than that to whomever it grants theatrical distribution rights. DreamWorks is not DWA, which releases just two pics a year — but they are such high grossers as to make even an 8% cut a nice payday.
The new DreamWorks is expected to require yearlong distribution help for its planned annual slate of six pics, some of which would be unlikely to ring up the kind of coin registered by this summer’s “Kung Fu Panda,” a $215 million domestic grosser. That had led many to predict DW might have to pay a distribution fee of 10% or more to whomever it chooses as its releasing partner.
Yet it now appears the new DreamWorks might secure an arrangement roughly of the sort enjoyed by DWA.
Elsewhere among the divorce proceedings, there is also the prospect of complicated negotiations with Par over DreamWorks securing rights to one or more film projects developed during its time at the studio.
Spielberg still would get producer credits on any of the 40 or so projects he helped to develop at Par, along with back-end compensation guaranteeing him 7.5% of the gross any such film that’s released. But it’s also possible DW execs would pay for the right to take one or more projects with them to the new company.
Team Spielberg also will be looking to sign up outside producers for the new DreamWorks. Those are likely to include a couple of the producers of this weekend’s DreamWorks/Par release “Eagle Eye” — Roberto Orci and Alex Kurtzman, who also penned the screenplay on last year’s DreamWorks/Par blockbuster “Transformers.”
Nyay Bhushan in New Delhi contributed to this report.
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