Paramount Pictures officially announced today its $1.6 billion deal for Dreamworks SKG, the would-be independent movie studio formed 11 years ago by David Geffen, Jeffrey Katzenberg, and Steven Spielberg. During a conference call Sunday afternoon, Viacom co-president & co-COO Tom Freston praised the deal as part of a "strategy for a new Paramount and Viacom". Paramount chairman & CEO Brad Grey called the move "a transformative event for the studio," saying that Dreamworks will make some 4 - 6 live action movies per year beginning in 2007, as part of a Paramount strategy of releasing 14 - 16 movies annually.
David Geffen will continue to run Dreamworks as its Chairman (with a three-year contract) and Paramount will also enter into a deal with director/producer Steven Spielberg (and it will handle releases from Jeffrey Katzenberg's separate Dreamworks Animation). Asked about the reasons for the sale, Geffen said during the conference, "We had hoped to be able to rationalize being our own distributor, with this deal we are combining our distribution and marketing people with Paramount. Together we will be able to distribute our films at a much lower cost per film." He added that he does not expect significant layoffs at Dreamworks, but added that company president and COO Rick Sands, who joined Dreamworks earlier this year from Miramax, will leave the company. [Eugene Hernandez]