With divorce between DreamWorks SKG and Viacom Inc.'s Paramount Pictures a given, the only issue now is who gets custody of the children. Like custody battles anywhere, this one could get nasty.
In the coming weeks, DreamWorks will begin the complicated business of dissolving their bitter 2 1/2 -year union, leaving in limbo hundreds of movie projects, employees, talent and producers who work for the company.
Although Viacom owns all of DreamWorks' assets, there could be difficult negotiations should exiting DreamWorks principals want to take any of those properties -- or people -- with them to their new home. Among them: Ben Stiller, who co-stars in DreamWorks' "Tropic Thunder," a highly anticipated comedy that Paramount will release in August; and Eddie Murphy, who starred in several of the company's hits.
Untangling the rights to various properties could be tricky. Steven Spielberg has attached himself as a producer to at least 30 DreamWorks projects, which Paramount will not be able to make unless it pays him substantial fees. The filmmaker is guaranteed 7.5% of every box-office dollar collected by Paramount until the movie breaks even. Once the studio recovers its cost and earns a distribution fee, Spielberg is then entitled to 50% of the film's profit.
DreamWorks co-founder David Geffen, who has made no secret of his disdain for Viacom Chairman Sumner Redstone and Paramount Chairman Brad Grey, is hoping to raise $1 billion in equity and debt financing to return the company he co-founded with Spielberg and Jeffrey Katzenberg in 1994 to its roots as an independent outfit. It is unclear, however, what will become of DreamWorks' approximately 100 employees, who are under contract to Paramount.
For the last couple of months, DreamWorks has been in talks with one of India's biggest conglomerates, Reliance ADA Group, about financing the transaction and its slate of six movies a year.
Two people familiar with the talks said the parties were discussing a deal in which Reliance would put up $500 million to $600 million in equity and $600 million of debt, which would value the transaction at $1.1 billion to $1.2 billion. People close to the situation said a deal was weeks away. One said it could still fall apart.
Geffen declined to comment Wednesday.
