Paramount plans for Spielberg, Geffen exits
Viacom CEO Philippe Dauman on Tuesday essentially threw down the gauntlet to Steven Spielberg and David Geffen, saying Paramount was making plans for a possible future without the duo and the effect of their ankling would be “completely immaterial” to the studio’s bottom line.
Dauman told investors at the Goldman Sachs media confab in Gotham the company was prepping in case the sides couldn’t come to terms on a renewal of the deal Geffen and Spielberg inked as part of Viacom’s 2005 acquisition of DreamWorks.
“That is a possibility, and we’re planning for that,” Dauman said.
Jeffrey Katzenberg, the third founder of DreamWorks, runs DreamWorks Animation and maintains voting control over the publicly traded company; a falling-out between Par and Geffen-Spielberg would not affect the Par distribution deal with DWA, which runs through 2013.
During the conference, Dauman also implied that Spielberg and Geffen would have a hard time finding independent financing and getting a return on an investment.
“It’s a tough business to get into,” Dauman said. “You really have to manage that business carefully and allocate capital carefully.”
Dauman added that if the duo left and started over, it would require “someone stepping into the Paul Allen role of a decade ago” — referring to the financing Allen provided DreamWorks in 1995 — to provide “a billion or two billion dollars.”
Private equity money would be one source of potential capital for a new Geffen-Spielberg venture, though the expected slowdown in that sector could make capital more elusive than it was a few years ago.
Word began circulating this summer that a rift was opening between Par and the powerful duo, and that Spielberg and Geffen may be prepping to exit DreamWorks when their deals expire at the end of 2008.
Par has a number of movies in its pipeline, Dauman said, ticking off J.J. Abrams’ “Star Trek” and “Cloverfield” projects, the Marvel property “Iron Man” and the Mike Myers vehicle “The Love Guru” as pics that would fill the void.
“The financial impact to Paramount first and especially to Viacom overall would be completely immaterial,” Dauman said.
Comments were notable for Dauman, who in public forums usually speaks in formal, restrained tones.
Exec’s decision to acknowledge the possibility of the pair’s departures instead of taking the safer route and expressing confidence in reaching a new accord with them seemed designed to send a message to the DreamWorks founders that Viacom would take a firm stance in upcoming negotiations. Given the Wall Street audience, it also seemed aimed at reassuring investors who may be anxious about the prospect of a deal not panning out.
Discussing “Indiana Jones and the Kingdom of the Crystal Skull,” Dauman did say Viacom wanted to do “everything possible to make (Spielberg) happy.”
If the pair left, the staff and many of the development projects would likely stay behind at Par, though Stacey Snider may be able to exit because of a key-man clause in her contract.
DreamWorks deserves the lion’s share of credit for Paramount’s year-to-date No. 1 rank in market share; division contributed a string of hits to the Melrose studio, including “Blades of Glory,” “Disturbia,” “Norbit” and “Transformers,” which was a co-production with Paramount.
While Paramount’s 2006 purchase of DreamWorks has been touted both in Hollywood and on Wall Street as a coup, cracks have begun to appear.
DreamWorks execs are said to have some regrets about the sale, especially since integration of the two operations hasn’t come as fast as some, including Par topper Brad Grey, have been said to want.
DreamWorks declined comment on Dauman’s remarks.
Dauman said Par’s larger strategy would take it more in the direction of “franchise pictures” that could also gestate at other parts of Viacom in the vein of “The Spiderwick Chronicles,” the feature version of the Nickelodeon property that’s slated for a 2008 release.
“As I look ahead in the long term of that business, we want to rely on franchise pictures, on our brand — MTV, Nickelodeon — and really have that as a core,” Dauman said. “Then we can take some chances on a few new franchises.”