DreamWorks Ends Talks With Universal
By KATE KELLY and BRUCE ORWALL
Staff Reporters of THE WALL STREET JOURNAL
September 27, 2005; Page A3
DreamWorks SKG said last night that it has terminated talks to be acquired by General Electric Co.'s NBC Universal unit, ending for now discussions of a potential $1 billion Hollywood deal.
The move by DreamWorks comes days before the end of an exclusive negotiating period it granted to Universal nearly two months earlier. Since word of the talks became public in July, both sides had expressed optimism about the potential combination.
"We pursued it for quite some time, we were unable to come to terms and we're no longer in discussions with them," said David Geffen, a DreamWorks principal, when reached last night. People close to the talks said price was an issue in the breakdown, but other factors could be at play -- including director Steven Spielberg's unwillingness to surrender any of the tremendous independence he has at DreamWorks.
There are reasons why the talks could one day resume, as Universal has been eager to bring DreamWorks into the fold and all parties liked the logic of the arrangement. Meanwhile, Mr. Geffen, who fronted the DreamWorks side in the talks, is a legendary dealmaker who is known for tough negotiating tactics. The Universal deal would have given DreamWorks founders -- Mr. Spielberg, Jeffrey Katzenberg and Mr. Geffen -- a graceful exit from the plans they laid out when founding the company in 1994. DreamWorks may seek another buyer, though it only has held discussions with Universal.
A deal would give Universal control of the DreamWorks live-action film studio, enabling Universal to ramp up film production and control DreamWorks' 60-title library. While the anticipated deal didn't include ownership of DreamWorks Animation SKG Inc., the animation studio that was split off in a public stock offering late last year, it would have allowed Universal the right to distribute that studio's lucrative cartoon fare in movie theaters. Universal also hoped to get direct access to the films directed by Mr. Spielberg, one of the industry's most bankable filmmakers.
Despite the optimism the companies had expressed, there were signs of problems. Some people close to the talks felt that GE and Universal were balking at DreamWorks' $1 billion-plus price tag -- especially given that some recent DreamWorks live-action movies, such as "The Island," have been flops and that its library is small by industry standards. There were concerns that Mr. Spielberg, who has been shooting his coming film "Munich" in Budapest hasn't been actively engaged in the talks.
For Universal, there have been questions about whether it could truly lock down Mr. Spielberg's services. At age 58, it isn't clear how long he will continue to make movies at his current pace.
The inability to make a deal could have other ramifications. DreamWorks distributes its live-action films, on DVD and overseas, through Universal. Because Universal is in the process of breaking its foreign-distribution partnership with Viacom Inc.'s Paramount Pictures, DreamWorks may be able to seek another distribution partner.
Write to Kate Kelly at kate.kelly@wsj.com and Bruce Orwall at bruce.orwall@wsj.com
By KATE KELLY and BRUCE ORWALL
Staff Reporters of THE WALL STREET JOURNAL
September 27, 2005; Page A3
DreamWorks SKG said last night that it has terminated talks to be acquired by General Electric Co.'s NBC Universal unit, ending for now discussions of a potential $1 billion Hollywood deal.
The move by DreamWorks comes days before the end of an exclusive negotiating period it granted to Universal nearly two months earlier. Since word of the talks became public in July, both sides had expressed optimism about the potential combination.
"We pursued it for quite some time, we were unable to come to terms and we're no longer in discussions with them," said David Geffen, a DreamWorks principal, when reached last night. People close to the talks said price was an issue in the breakdown, but other factors could be at play -- including director Steven Spielberg's unwillingness to surrender any of the tremendous independence he has at DreamWorks.
There are reasons why the talks could one day resume, as Universal has been eager to bring DreamWorks into the fold and all parties liked the logic of the arrangement. Meanwhile, Mr. Geffen, who fronted the DreamWorks side in the talks, is a legendary dealmaker who is known for tough negotiating tactics. The Universal deal would have given DreamWorks founders -- Mr. Spielberg, Jeffrey Katzenberg and Mr. Geffen -- a graceful exit from the plans they laid out when founding the company in 1994. DreamWorks may seek another buyer, though it only has held discussions with Universal.
A deal would give Universal control of the DreamWorks live-action film studio, enabling Universal to ramp up film production and control DreamWorks' 60-title library. While the anticipated deal didn't include ownership of DreamWorks Animation SKG Inc., the animation studio that was split off in a public stock offering late last year, it would have allowed Universal the right to distribute that studio's lucrative cartoon fare in movie theaters. Universal also hoped to get direct access to the films directed by Mr. Spielberg, one of the industry's most bankable filmmakers.
Despite the optimism the companies had expressed, there were signs of problems. Some people close to the talks felt that GE and Universal were balking at DreamWorks' $1 billion-plus price tag -- especially given that some recent DreamWorks live-action movies, such as "The Island," have been flops and that its library is small by industry standards. There were concerns that Mr. Spielberg, who has been shooting his coming film "Munich" in Budapest hasn't been actively engaged in the talks.
For Universal, there have been questions about whether it could truly lock down Mr. Spielberg's services. At age 58, it isn't clear how long he will continue to make movies at his current pace.
The inability to make a deal could have other ramifications. DreamWorks distributes its live-action films, on DVD and overseas, through Universal. Because Universal is in the process of breaking its foreign-distribution partnership with Viacom Inc.'s Paramount Pictures, DreamWorks may be able to seek another distribution partner.
Write to Kate Kelly at kate.kelly@wsj.com and Bruce Orwall at bruce.orwall@wsj.com