Spielberg Finalizes Split From Paramount
Steven Spielberg and his DreamWorks SKG chief Stacey Snider finalized their split from Paramount Pictures, Viacom's (VIA) movie studio, on Sunday, figuring out how to handle the dozens of projects the two companies have under development.
Spielberg and Snider are expected to take most of their current 140 DreamWorks employees with them to their new venture financed with $1.3 billion, the equity put up by India's Reliance and the debut financing from J.P. Morgan. David Geffen (the G in SKG) helped organize the new company, but he doesn't have any plans to be involved in the new company, and he's also resigning from Paramount, effectively ending his career in the film industry
Spielberg and Paramount's separation agreement include key details about which company will produce and finance which movies, and how the two companies do intend to work together. DreamWorks had about 200 development projects Paramount owned: Spielberg's new company will take the lead developing about 20 projects Paramount currently owns through the current DreamWorks, giving Paramount an option to co-finance and co-distribute them. Some of these films are well under way, including much-buzzed about "The Trial of the Chicago 7" which Spielberg is working on with writer Aaron Sorkin and director Paul Greengrass. Paramount will take the lead on developing another 15 to 20 projects. Most of the remaining 200 films under development will stay at Paramount.
Development projects aside, Spielberg is continuing to produce Paramount films, including sequels to the hit "Transformers," and an upcoming SciFi "When Worlds Collide." The two entities have no contractual obligation to work together, but Spielberg and Paramount are clearly going to be working together for a while, and agreeing to work together on those projects under development keeps the relationship positive.
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What a whirlwind couple of years since Spielberg, Geffen, and Jeffrey Katzenberg sold DreamWorks SKG to Viacom in 2006 for $1.6 billion. (At that point Katzenberg exited the live action studio to focus solely on his role running stand-alone public company DreamWorks Animation Studios).
There's been a lot of drama and name calling over the course of Spielberg's tenure at Paramount--conflict between Spielberg's team, which was used to total independence and Paramount chief Brad Grey. Philippe Dauman, Viacom's CEO, even got involved at one point, saying Spielberg's contribution was immaterial to the company. Viacom changed its tune recently, making a big effort to make nice, for lack of a better way to put it, and secure this kind of solid ongoing working relationship.
Now analysts are looking positively on this change--Miller Tabak releasing a note this morning saying that this separation is a positive step for Viacom. On the other hand, Viacom is suffering from a lot of macro market issues, and Miller Tabak also reduced its short term price targeted for the stock to $29 (from $39).
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