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Billionaire May Increase Stake in DreamWorks

July 09, 1998|MARLA MATZER | SPECIAL TO THE TIMES

Billionaire investor Paul G. Allen will reportedly acquire a portion of South Korean food and pharmaceuticals company Cheil Jedang Corp.'s stake in DreamWorks SKG in a move triggered by Korea's severe financial crises.

The acquisition will give Allen 24% of the fledgling studio, a larger stake than the approximately 22% held by each of the company's principals: director Steven Spielberg, studio veteran Jeffrey Katzenberg and music impresario David Geffen. Though Allen will be the biggest single shareholder, the three Hollywood moguls continue to call the shots at the company.

Observers have speculated for months that Cheil would look to sell some or all of its 11% stake in the company--which it agreed to pay $300 million for in 1995--in the wake of the Asian financial crisis. A source told The Times in February that there was disagreement among top Cheil executives about the fate of the DreamWorks investment, with some pushing to divest.

Though a Cheil spokesman in a Bloomberg News report denied a story that appeared in Wednesday's Wall Street Journal that it was planning to sell to Allen, sources close to the studio confirmed that Allen is assuming more than half of Cheil's 11% stake.

Like virtually all South Korean firms amid the ongoing economic turmoil in the Far East, Cheil has apparently not been able to get money out of the country to keep paying toward its investment. Cheil will still own about 5% and have Korean distribution rights for DreamWorks films.

Allen, meanwhile, has been taking an active interest in DreamWorks, in which he had previously invested $500 million. Allen, 45, has used the billions he has earned from co-founding Microsoft Corp. to invest in a number of other media ventures, including USA Networks and Dallas-based Marcus Cable. A spokeswoman for Allen's Seattle-based Vulcan Northwest investment fund would confirm only that Allen has increased his ownership in DreamWorks.

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