Paramount Pictures, a unit of Viacom Inc., has closed on its acquisition of DreamWorks SKG for $1.6 billion in cash and assumption of debt. The announcement was made today (Feb. 1, 2006) by Paramount chairman/ceo Brad Grey. The company noted that it is well along in its process to sell the DreamWorks live-action film library.
Under the agreement, Steven Spielberg and David Geffen of DreamWorks will remain in their respective roles as producer/director and chairman.
In addition, DreamWorks Animation SKG will begin operating under its new seven-year distribution deal with Paramount Pictures for the rights to distribute DreamWorks Animation films in theatrical, home entertainment and television markets on a worldwide basis beginning with the company's next release, OVER THE HEDGE.
Paramount will be responsible for the marketing and distribution of DreamWorks Animation films and will earn the same 8% distribution fee that had previously been paid to DreamWorks Studios. The new agreement with Paramount expires by the end of 2012, which is two years longer than the original distribution deal with DreamWorks Studios. As a result of the new deal, DreamWorks Animation received $75 million in cash, which it has used towards the repayment of debt.