Spielberg said, "I am thrilled by today's announcement of the deal with Viacom/Paramount, who came recently to the table and were able to conclude and sign agreements quickly. Due to my very long history and my loyalty to Universal, I was saddened that after long negotiations and many compromises, we were unable to come to terms with Universal's parent company, GE. Nevertheless, I am truly looking forward to working with Tom Freston, Brad Grey and Gail Berman, as this is an exciting opportunity for each of us to embark on a new adventure together."

Jeffrey Katzenberg, ceo of DreamWorks Animation, said, "I am excited about the benefits and new opportunities that the Paramount partnership brings to our company. Brad and his team are a first-class organization and the chance to work with Paramount and promote our movies on Viacom's network provides us a unique platform to showcase our products and build our brand. DreamWorks Animation is a company that strives to reach the broadest audience with its films and now with access to Nickelodeon and the rest of the MTV Networks brands, I believe we have a great partner for helping us achieve that goal."

Upon completion of the acquisition, the DreamWorks library is expected to be sold to a third party investor, leaving Paramount with a greatly enhanced distribution pipeline and an ongoing production partnership with Spielberg and Geffen.

Mike Dolan, cfo of Viacom, said, "The sale of the library allows us to reduce our investment in the transaction and enables us to focus on our key objectives — leveraging and strengthening our distribution network through the addition of more 'A' level product and creating stronger production partnerships. As always, we focused on financial metrics that drive shareholder value, including discounted cash flows and return on invested capital, and this transaction exceeded our hurdle rates. Additionally, the transaction is accretive to net income and free cash flow in 2006. Pro-forma for the sale of the library, we will have accelerated the turnaround of Paramount, while insuring adequate capital for tuck-in digital growth opportunities and share buybacks going forward."

Also, upon completion of the acquisition, Spielberg and Geffen will enter into new employment agreements in the respective roles of producer/director and chairman. Katzenberg will remain in his role as ceo of DreamWorks Animation. As part of the new organization, the production and development operations will continue under the leadership of Spielberg and Geffen, who will be responsible for producing four-six live-action films per year of Paramount's total target slate of 14-16 films, which the company expects to achieve by 2006. Sales and other infrastructure will be integrated with Paramount operations.

Additionally, Paramount will enter into an exclusive theatrical/home video/television distribution agreement to release films from DreamWorks Animation, the business unit spun off from DreamWorks as a public company in 2004, throughout the world for the next seven years. The first picture for release under the new agreement is OVER THE HEDGE, scheduled to open in summer 2006.

The purchase price of the acquisition will be financed by Viacom working capital and committed financing facilities. The transaction is expected to close in the first quarter of 2006, and is subject to expiration of regulatory waiting periods.

Earlier this year, Viacom announced it would be separating its businesses into two publicly traded companies, and expects the transaction to be completed by the end of 2005. The new Viacom will own MTV Networks (MTV, VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT: Country Music Television, Spike TV, TV Land and many other networks around the world), BET, Paramount Pictures, Paramount Home Ent. and Famous Music. CBS Corp. will own the CBS Television Network, UPN, Infinity Broadcasting, Viacom Outdoor, Viacom Television Stations Group, Paramount Television, King World, Simon & Schuster, Showtime and Paramount Parks.