Paramount Reportedly Set to Buy DreamWorks

As recently as October, Paramount had publicly denied any interest in the acquisition after its parent company, Viacom Inc., balked at the high asking price of $1.5 billion including assumption of debt. But Viacom's board approved just such a bid Thursday, provided that outside investors help finance the deal.

As of Friday afternoon, they still hadn't lined any up, but sources said investors would be selected after the deal's announcement, which is expected as early as Sunday.

The acquisition would be a major coup for Paramount Chairman Brad Grey, the former talent manager who since being hired in March has moved aggressively to remake the struggling studio.

It also would mark the end of a dream hatched 11 years ago, when three of Hollywood's most high-profile figures -- director Steven Spielberg, music mogul David Geffen and veteran studio executive Jeffrey Katzenberg -- set out to build a multifaceted entertainment empire. The sale to Paramount would leave the industry with just one major independent studio: Lions Gate Entertainment.

Executives from Viacom, Paramount, DreamWorks and NBC Universal declined to comment.

Under the deal, Paramount would gain control of DreamWorks' live-action movie production operation and its relatively small, 60-title library, which includes such Oscar-winning movies as "American Beauty" and "Gladiator."

It also would give Paramount the worldwide distribution rights to all animated movies made by DreamWorks Animation, which was spun off last year to public shareholders and would not be part of the purchase.

What Paramount would be buying is a significantly pared-down version of the studio that DreamWorks' founders launched in 1994 amid media fanfare. Initially, the partners -- who were heralded as "The Players" on the cover of Time magazine in 1995 -- vowed to make their mark in music, film, television and the Internet in a new digital studio they planned to build near Marina del Rey.

But the partners soon abandoned plans for a sprawling studio campus at Playa Vista. And eventually, DreamWorks sold off its money-losing music label, all but shuttered its television production studio and ditched its ambitious plans for Internet and video game ventures.