If Warner Bros. winds up taking on DreamWorks’ international theatrical and global homevideo and TV distribution, it may have more to do with parent company AOL Time Warner than the company’s studio.
Although DreamWorks is still shopping its distribution deal to a number of parties, the studio’s talks in recent weeks have focused mostly on Warner.
Studio sources say Warner is not interested in making an equity investment of several hundred million dollars in the studio, coin that the money-losing DreamWorks needs to compensate for its primary investors’ reluctance to sink any more capital into the company.
But others say that Warner parent AOL Time Warner is interested in putting up as much as $150 million and giving DreamWorks a much-needed online component through America Online. DreamWorks saw its online programming venture Pop.com implode before it even got off the ground and has sold its DreamWorks Interactive unit to Electronic Arts.
Some sources say DreamWorks expects as much as $300 million but may seek foreign investment if it can’t tie the investment to a distribution package.
DreamWorks’ distribution deal with Universal expires at the end of the year, but DreamWorks has an early-out notification clause that could be exercised in June. In any case, U would handle DreamWorks product through the remainder of the year.
Discussions of a new distribution arrangement began last year but have been leading away from Universal almost from the beginning, with a source at U saying last week that he gave Universal only a 20% chance of renewing the pact at this point.
Although Universal Studios Home Video would take a top-line hit with the loss of DreamWorks, which represents 25%-30% of Universal’s gross video receipts, U’s take-home share of the profits from the partnership contributes less than 10% to Universal’s bottom line.
DreamWorks, Universal and Warner declined comment.