DreamWorks and Par and the town's Trojan Horse theory

By Josh Young

(Note: Par-Nick-MTV Films update is at bottom.)

It looks like that Huck Finnish boy fishing off the half-moon of the DreamWorks logo may have caught a whale named Paramount.

In what one top talent manager calls �a reverse acquisition,� there�s been talk around town for months that DreamWorks SKG is slowly taking control of Paramount Pictures. Since Paramount�s parent company, Viacom, purchased DreamWorks for $1.6 billion, DreamWorks has made its presence felt to the point that some veteran industryites see DreamWorks all but eclipsing Paramount within the next year.

�Paramount is (in) turnaround and they are being picked up by DreamWorks,� says one talent agent. �The writing is on the wall.�

Here�s the argument:

DreamWorks has Stacey Snider

Shortly after being bought by Paramount, DreamWorks lured Snider away from Universal Pictures. Having run a studio for a decade, Snider is more than capable of overseeing all operations at Paramount � many say she�s more capable than current chairman Brad Grey.

Snider, who is just 44, has already shown her business acumen. When Paramount�s �Ripley�s Believe It Or Not� became a budget-buster and director Tim Burton became available, Snider grabbed him, moving up the start date of �Sweeney Todd.�

One agent believes that Snider is already sizing up Paramount executives. �We were at lunch and she asked me how I felt about Brad Weston,� the agent said. �She asked, �Is he a good executive? Do you think I could work with him?��

Another producer who knows Snider well said that she is keeping her options open.

�Stacey is being savvy and making sure there isn�t a better opportunity,� the producer says. �She is trying to figure out how to be the happiest and make the most money. If DreamWorks doesn�t go private, she is going to get some pressure in the next year to take that Paramount job, one way or the other.�

DreamWorks already runs marketing at Paramount

After Paramount bought DreamWorks, the studio promptly fired much of its homegrown marketing and distribution staff and replaced them with their DreamWorks counterparts. Los Angeles magazine reported that soon after Katzenberg met with every Paramount marketing and distribution executive, pink slips were handed to 120 Paramount employees. (Note: DreamWorks staffers were fired as well, including 44 this Friday.)

Steven Spielberg still wants a back lot

The notoriously press shy Steven Spielberg, who gave virtually no interviews to promote �Munich,� sat for a two-part interview on AMC�s �Shootout,� co-hosted by Peter Bart and Peter Guber. Parts of the interview were excerpted in Variety.

Spielberg reiterated that one of his greatest regrets was not building a backlot. First, the DreamWorks trio turned down an offer in 1994 to takeover Tri-Star Pictures and the Culver Studios lot, where Sony�s TV operations are based. DreamWorks then contracted to build a utopian studio at Playa Vista, but developer woes and environmental concerns toppled the plan.

�I wanted to cry,� Spielberg said. �It was so, so sad when that part of it didn�t come into play. I really wanted, more than Jeffrey, more than David�I was pushing to have a homeland, to really have a base of operations.�

Well, 5555 Melrose Avenue looks pretty good. And there�s even talk of The Grill building an outpost on the lot.

The Brad Grey/Gail Berman team isn�t exactly succeeding

Grey�s tenure has been marked by persistent media reports linking him to the Anthony Pellicano federal investigation, by a slash-and-burn management style where studio stalwarts like Donald De Line learned they were fired in the media and respected indie mavens David Dinnerstein and Ruth Vitale were left dangling in the wind for months, and an overall lack of direction.

�They are having a hard time,� says the producer of Grey and Berman. �Paramount hasn�t defined itself. It�s very hard to get things done there.�

Should DreamWorks subsume Paramount, Grey could declare victory. In the eyes of the Viacom brass, he�s a hero because he put the whole thing together. To placate Grey, Viacom could simply bump him upstairs or give him a big fat production deal.

For her part, Berman has been working hard on this fall�s �Dreamgirls.� But there�s no way around the fact that if it�s successful, it will be seen as a DreamWorks movie�due in no small part to David Geffen�s involvement.

The first movie produced on Berman�s watch was this month's "Nacho Libre," which opened well ($28 million), but dropped 57% in its second week. Her next pic is the August release �World Trade Center,� directed by Oliver Stone and starring Nicolas Cage. Quality may win the day, but the grosses aren�t going to match �The Da Vinci Code.�

The price is right

Here�s the math on a new Paramount. $1.6 billion (to buy DreamWorks) - $900 million (paid by a fund headed by George Soros for DreamWorks library titles) = $700 million.

While that might be a premium for a production company, consider what Viacom gets if DreamWorks takes over the entire enterprise: Spielberg�s movies and his creative acumen on everything (�Nickelodeon would be a nice sandbox for him,� the manager says); the highly regarded Snider; an entire marketing division; the distribution rights to DreamWorks Animation�s movies; Katzenberg as a consultant (his contract with the publicly held DreamWorks Animation runs through 2009); and the intangible genius of Geffen.

Add on the cost of buying out Berman (with a TV deal perhaps) and Grey (with a production deal that actually might yield, say a new �Sopranos� or successful Jennifer Aniston movie).

Now consider that Sony forked over nearly $1 billion in 1994 dollars to obtain the services of Peter Guber and Jon Peters. And Disney just paid $7.4 billion for Pixar. By those standards, Viacom made a pretty good deal as these things go.

Asked for his take on the scenario of DreamWorks taking control of Paramount, a veteran agent said: �Your story is either a blog, a prophecy, or deal already done. We shall see.�

Whatever happens, Spielberg made it crystal clear that DreamWorks is not taking orders from Paramount.

�Gail Berman is running Paramount Pictures, and that�s separate from DreamWorks Pictures,� Spielberg said on �Shootout.� �And that�s something we�re trying to get the town to understand. Stacey Snider is running DreamWorks Pictures.�

Gotcha.

UPDATE:The Los Angeles Times' Claudia Eller is reporting this morning that Paramount it hoping to gain more control over its MTV Films and Nickelodeon Film units with a massive reorganization promoted by studio boss Brad Grey. The two film divsions had reported to Viacom in New York. But Par thought the arrangement was unneccessary and costly.

TMZ's Claude Brodesser agrees:

For one thing, last year's movies weren't anything to brag about at MTV Films: "Get Rich or Die Tryin'" was a dud, "Aeon Flux" was an outright bomb. The documentary "Murderball" won critical praise, but it never completely caught fire and barely made $1.7 million. All were squandered opportunities to grow MTV Films into a bigger portion of Paramount portfolio.

Now, the units will become studio labels, like Paramount's specialty shigle, Vantage.

Eller:

The move is part of a larger strategy in which Grey and Freston envision further developing Viacom's cable channels, which also include BET and Comedy Central, into lucrative movie banners.

"Paramount and MTV Networks have been working together to find an optimal new structure to bring MTV Films and Nickelodeon Movies into the Paramount Motion Picture Group," studio spokeswoman Janet Hill said.

The new structure anticipates that the MTV Films and Nickelodeon Movies chiefs would answer directly to Paramount management. The two movie units' executives, however, would continue to work closely and collaborate with the cable networks on film content and promotion.

Also, Eller and Variety are reporting that MTV Films president David Gale has been reassigned to take over MTV's new media unit, which is charged with acquiring and producing content. Doesn't look like he'll be doing much of either. Variety notes that Gale will have "one staff member and a set of freelancers working under him in the new division" - with a promise, of course, from MTV honco Van Toffler of more growth to come.

Meanwhile, Anne Thompson (RiskyBiz), Dave Poland (Movie City News) and Jeffrey Wells (Hollywood-Elsewhere) have both weighed in on WireTap's Paramount-DreamWorks story. Below are links to their commentary.

DreamWorks and Par and the town's Trojan Horse theory

By Josh Young

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