Conglom sells stake in studio

Japanese media giant Kadokawa is following South Korean major CJ Entertainment and selling its stake in DreamWorks to Paramount.

Kadokawa will sell its 2.91% stake for $21.7 million by the end of February, according to press reports. CJ sold its 4.95% stake for $35.8 million on Tuesday.

Kadokawa invested $100 million in DreamWorks in 2004 for a 2.83% equity stake in the studio (later increased to 2.91%), in exchange for theatrical rights to 35 DreamWorks titles and DVD and video rights to 35 titles. It will keep those rights after the sale and distribute at least 31 films through 2018.

Deal also encompassed publishing, merchandising and licensing rights, as well as the option to remake Kadokawa films. In 2004, when DreamWorks’ animation division went public, Kadokawa received $56.56 million in shares.

As a result of the sale, Kadokawa will take an extraordinary loss in fiscal 2005 of $21.4 million but expects to recover it with DreamWorks revenue.

CJ paid $300 million in 1995 for 11.1% of the new studio and secured an exclusive distrib deal for Korea and other parts of Asia. It subsequently sold off most of its stake.

Paramount finalized its $1.6 billion purchase of DreamWorks on Thursday.

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