Complex deals may keep the pair joined for a while
They couldn’t tie the knot, but breaking up could be even harder to do.But now that talks for Universal to acquire DreamWorks have broken down, their agreements could ensure they stay together for a longer. The agreements between DreamWorks and Universal are spelled out in several SEC filings related to the stock offering of DreamWorks Animation — although it would take a battalion of corporate lawyers to fully understand them. Perhaps the most important pact is U’s deal to distrib DreamWorks’ pics overseas and its DVDs worldwide. According to the SEC filings, the current pact runs through the end of 2010 and can be extended by U “under certain conditions” for two more years. But the agreement is based on the continuation of UIP, U’s foreign distrib joint venture with Paramount. DreamWorks can pull out of the agreement, “if UIP ceases to distribute Universal Pictures’ or Paramount Pictures’ films or UIP’s ownership changes.” U and Par announced they would wind down UIP early last month, but it’s not clear whether that announcement would be enough to break the DreamWorks-U pact: UIP continues through the end of 2006, and for two years afterward, Par and U will still distrib each other’s titles, though under a new arrangement. Still, it appears that DreamWorks thinks the changes could be enough to pull out of the U pact. Shortly after talks with U broke down, David Geffen told the Los Angeles Times that DreamWorks might seek another foreign distrib in light of the UIP changes. But even if DreamWorks were able to break its pact early, it would still have to work with U in homevid. U has worldwide distrib rights for all DreamWorks titles. But, again according to SEC filings, if DreamWorks pulls out of the foreign theatrical deal, it would be able to end the homevid pact “only in the international territory.” Meaning U would still be its homevid distrib in the U.S. Both DreamWorks and Universal declined to comment on their contractual agreements.