Top 12 Film Industry Stories of 2008:
#4: The Dream(Works) Is Over. Again.
By David Mumpower
January 14, 2009
Meanwhile, the deal with Universal has proved to be trickier due to the plummeting economic situation. On October 13, a deal was reported that would allow DreamWorks to produce six releases a year that would be distributed by Universal. The two companies worked together to secure the rights to 17 projects that DreamWorks had been spearheading through Paramount, and those are the highest priorities at the moment. In exchange, Paramount gets to distribute all 11 DreamWorks titles in the coming year as well as 17 others in active development that Spielberg's group may co-finance if so inclined. Effectively, DreamWorks has developed an open relationship wherein they have left Paramount in order to be with Universal, but they have reserved the right to hook up with Paramount whenever it's late, they're horny, and they can't get Universal to text back.
This remarkable turn of events will have a wide reaching impact on the industry in coming years. The complex distribution deals created here have split one of the most creative movie productions groups, making them fence-sitters who are always a slave to other masters. At least, they would be if they could get the money. The sticking point to date is that despite their vaunted revenue history, DreamWorks is getting stymied in loan negotiations the same way anyone else in the United States is right now. An expected $75 million loan needed to finance the transfer of power from Paramount to independent ownership once has been help up. We are a matter of days away from resolution of this financial matter but if DreamWorks is unable to secure the loan, they will be unable to purchase the 17 aforementioned projects. This would create an awkward situation wherein their expected sources of future revenue as well as co-financing from not just Paramount and Universal but also an Indian company, Reliance, would all be jeopardized.
As of this moment, one of the most storied endeavors in the film industry's history, DreamWorks SKG, has an unsecure future. Because of the house of cards situation they have built in trying to re-attain independence and the nature of international finance at the moment, the fate of DreamWorks and the 200 movies they had planned over the next ten years are all in doubt. We fully expect a satisfactory resolution on this matter, but it's far from a foregone conclusion. DreamWorks' quest for independence was a huge story in 2008 and its success/failure in this regard will continue to be one of the biggest of early 2009. A lot of post-Writer's Strike movies could wind up in development hell if DreamWorks cannot secure the appropriate loans.