DreamWorks SKG and Paramount Pictures Corporation settle over movie projects
DreamWorks SKG is separating from Paramount Pictures Corporation and it has been finalized. Paramount Pictures even waived “certain provisions†which would allow DreamWorks to walk away with its 150 employees and start the new company without delay. Over the years, Paramount Pictures and DreamWorks did not share a very good relationship. Paramount bought DreamWorks in 2005 with $1.6 billion. At that time, Paramount Pictures was going through tough time as its movies did not do well at the box office. DreamWorks produced some block busters and helped to generate revenues for Paramount Pictures.
Under the current deal, DreamWorks founder, Steven Spielberg, will be able to take the name of the company and all the employees. He will also get 7.5% of box-office revenue and half of the profits for the projects of DreamWorks that will be released by Paramount such as, Tansformers 3. However, Paramount Pictures will not pay for the movies that Spielberg and David Geffen developed within the last two and half years, the time during which DreamWorks was a subsidiary of Paramount Picutres. For example, Paramount Pictures will get to keep all the profits of Transformers and Transformers 2. Transformer earned $500 million worldwide.
Brad Grey, the current chairman and CEO of Paramount Pictures Corporation, is very happy with the separation but he will have a tough time because he has to prove to the investors that Paramount Pictures can stand on its own.
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