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October 02, 2007
The Story
Variety got it tonight… I expect it will be in the LA Times too. But neither the New York Times or the Wall Street Journal seem to have The Story… and this is huge.
Phillipe Dauman pushed back against DreamWorks a little last month. But tonight, the Paramount side has announced that it is blinking in a major way.
The outside of The Story is Paramount agreeing to have DreamWorks produced pictures tracked at the box office as DreamWorks-Paramount films. A bit of a yawner, as anyone with a brain was already separating the two sets of numbers.
But when Variety floats, “This could help to pave the way for a scenario in which DreamWorks becomes more of an autonomous production company, with the ability to raise outside money, in addition to its allotment from Paramount,” you should read that as “Geffen is planning on becoming further independent with outside funding, which includes the DreamWorks division earning a larger percentage of the revenue from the movie in which they bother to invest.”
More specifically, that would be the same situation DreamWorks SKG was in when splitting movies with Paramount in the past.
So, when the next Transformers comes along, DreamWorks may well have the opportunity to split it with Paramount. Worse, with relationships with lower risk, high potential reward players like Ben Stiller, DreamWorks could, theoretically finance films entirely on their own, using Paramount distribution only.
And who is to say that Geffen won’t flex his muscles on Transformers 2, demanding a renegotiated deal that allows the DreamWorks partners a significant new piece of the action.
What was the most one-sided production company deal in the history of Hollywood? Revolution Studios at Sony. This could be much worse, because whatever separation between teams existed with Revolution and Sony is non-existent with DreamAmount. Team DreamWorks is an internal organ of Paramount.
Now… one could argue that Paramount is the funder and could say, “no,” and not renegotiate and not let DreamWorks have its way. But this is a very unbalanced relationship. Paramount’s willingness to concede here is indicative of just how scared they have to be of DreamWorks up and leaving the studio. The hierarchy at Sony survived the quick turnover of the MGM deal in part because they had limited actual investment and relatively simple goals, most of which were achieved in the short term. For DreamWorks to be this successful and to walk away from Paramount after three years would be a clear failure of leadership and could actually hurt the stock price, the owner’s obsessive focus.
Perception can be treated as reality… in Hollywood and on Wall Street. And right now, DreamWorks has 85% of the leverage in the perception battle. And today, David Geffen knows he can use it to get the things he wants.
The only reason not to be betting that Katzenberg, Geffen, and Spielberg will be the owners or co-owners of Paramount by this time next year is that Spielberg would still prefer to own Universal. NBC/Paramount anyone?
Les Moonves’ CBS with the Viacom cable nets under the umbrella and a working film production division?
DreamWorks/ Universal with cable nets and a semi-permanent pay TV deal?
The door to all kinds of changes just opened on Melrose. I love show business.
Posted by poland at October 2, 2007 10:31 PM
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