Mogul must pay Paramount for film rights
As DreamWorks toppers labor to shore up financing for their post-Paramount incarnation, the bills keep mounting.
DreamWorks is expected to write a check today for $26.5 million of the $30 million-$35 million it owes Par for the right to keep 17 films in its fold. Remarkably, DreamWorks principal Steven Spielberg will be dipping into his personal coffers — perhaps for the first time in his career — to foot half the bill.
Indian conglom Reliance is covering the other half, according to a DreamWorks source. By paying the lump sum, DreamWorks will hold onto projects including “The 39 Clues,” “The Trial of the Chicago 7,” “Dinner for Schmucks,” “Motorcade” and “Atlantis Rising.”
In addition, Spielberg and Reliance are splitting the solo company’s hefty overhead, which Paramount sources said was $50 million a year when DreamWorks was owned by the Melrose studio.
It’s no secret that DreamWorks continues to have difficulty assembling financing amid weak global credit markets. In fact, the revamped company headed by Spielberg and Stacey Snider has been forced to scale back its original ambitions significantly. Reliance had initially promised to invest up to $550 million in the Hollywood company, assuming that DreamWorks could match that amount in debt raised through its bankers at J.P. Morgan. For now, those targets have been reduced to $325 million each for Reliance and J.P. Morgan, though DreamWorks hopes to raise an additional $225 million during second- and third-stage financing sometime in the next seven years, which Reliance would match. But the big remaining question mark is whether the initial J.P. Morgan loan will syndicate, and if so, when.
Though DreamWorks brass are confident the loan will syndicate during the current quarter, the ramifications of the company’s financial obstacles are already being felt. But it’s clear Spielberg’s decision to pay is proof he’ll do whatever it takes for the deal to go through.
As a result of the lack of coin, DreamWorks has lost the right to co-finance roughly 17 Paramount-led, DreamWorks-developed projects that the two parties had agreed to share when the Par-DreamWorks settlement agreement was inked in October. The reason is DreamWorks couldn’t meet a key clause — it was required to co-finance two projects that were already in production, thus voiding its right to opt in on the 17 Par projects, which include a Lincoln biopic, “The Rivals,” and an untitled Diablo Cody project that is a modern take on Shakespeare’s “The Taming of the Shrew.” Spielberg will remain involved as a producer.
Meanwhile, Paramount has been somewhat cash strapped after the studio walked away from a $450 million slate financing deal last summer with Deutsche Bank because the deal points were deemed unfavorable.
So, what’s the Melrose studio to do with its sudden windfall? “We’re going to put it in our mattress,” said one Par exec.