Saturday, February 14, 2009

Spielberg and Disney reportedly near a deal

LOS ANGELES: Steven Spielberg seems headed to the Walt Disney Co. after a surprise parting of the ways with Universal Pictures, with whom he signed a deal just four months ago.

The director's production company, DreamWorks SKG, was in advanced talks Friday on a deal to distribute its movies through Disney, according to several people who had knowledge of the talks but who asked for anonymity because no paperwork had been signed.

The deal would shore up Disney's movie studio, which has been struggling lately, reporting a 64 percent decline in operating income in the most recent quarter. It would also give Spielberg a huge global marketing platform for his family-friendly work.

Universal Pictures, a division of NBC Universal that agreed in October to distribute DreamWorks films, issued an icy statement saying it was cutting ties with Spielberg's studio.

"DreamWorks has demanded material changes to previously agreed-upon terms," the statement read in part. "It is clear DreamWorks' needs and Universal's business interests are no longer in alignment."

A spokeswoman for Disney declined to comment, as did Stacey Snider, the chief executive of DreamWorks.

Disney was a suitor for DreamWorks back in October, and Snider and David Geffen, the co-founder of the studio, were keen to align with the company. But Spielberg ultimately overruled them, concluding that he wanted to go back to Universal, where he had made his first blockbuster, "Jaws," and where he still maintained his primary offices.

Since then, however, the landscape in Hollywood has shifted. DreamWorks has been unable to find the financing to match the $500 million it received from Reliance Big Entertainment last fall to finance its exit from Paramount Pictures. Spielberg has even injected personal money.

The motion picture division of Disney, meantime, has been under pressure from Robert Iger, the company's chief executive, to improve the quality of its live-action movies and to introduce bigger "event" hits. The studio's Touchstone label has been a disaster of late, with the films "Miracle at St. Anna" and "Swing Vote" ignored in the marketplace.

Miramax, another Disney division, is having modest box-office success with "Doubt" but is a shadow of its former self. Disney has been quietly weighing the sale of the unit.

Disney also has room on its schedule to accommodate the four to six films DreamWorks plans to produce each year. In 2006, Disney limited the number of movies it makes to about 12, from as many as 20 in previous years, choosing to focus more on family films made on the Walt Disney Pictures brand. Coming movies include a fourth installment of "Pirates of the Caribbean" and a remake of "The Lone Ranger."

One challenge for Disney will be keeping its existing producers happy - among them Jerry Bruckheimer, no shrinking flower - while servicing the needs of DreamWorks, which can be extreme. DreamWorks has left substantial wreckage in its wake as it has hopscotched from distribution partner to distribution partner.

Paramount Pictures, part of Viacom, bought the company in 2006 but bid it farewell last autumn after a tenure marked by torrid infighting. Universal stepped in four months ago as a distribution partner, but that association quickly soured, too.


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