A deal will be announced before the end of the year that will deliver Steven Spielberg’s DreamWorks Studios a $200 million equity infusion from Participant Media, while also shifting the studio’s distribution deal from Disney to the director’s longtime home at Universal Pictures, according to multiple sources familiar with the situation.
Final details of the arrangement are still being ironed out, but the deal is expected to be wrapped up within days, bringing Spielberg’s operation a much-needed jump start, both economically and strategically. The transaction will bolster DreamWorks’ finances at a time when the continued commitment of its key equity investor, Reliance ADA Group of India, has come into question. However, one source cautioned that Reliance is expected to remain an active investor under the new deal.
DreamWorks Studios is trying to reboot itself after a series of disappointing films and lack of direction. While he remains one of Hollywood’s top directors, Spielberg has told associates that he feels DreamWorks movies have not been a high priority for a Disney operation that is busy releasing a string of blockbusters from its Marvel, Pixar and Lucasfilm units. Next summer’s Spielberg-directed “The BFG” will be the final DreamWorks picture released by Disney.
The company needs to re-assert a strategic mission, following a leadership transition prompted by the departure of former chief executive and Spielberg partner Stacey Snider for a top movie role at Twentieth Century Fox. Former television executive Michael Wright – who had headed programming for TBS, TNT, and Turner Classic Movies — succeeded Snider. But the DreamWorks leaders have been hard-pressed to find new investors to keep the operation going. The urgency to get the company back on track was underscored by a run of box office flops including “Need for Speed,” “The Fifth Estate” and “Delivery Man.”
Faring better was Spielberg’s Cold War drama “Bridge of Spies,” starring Tom Hanks — the only movie DreamWorks had in release this year. The film grossed $113 million worldwide.
So far, DreamWorks has only two releases dated for next year, “BFG” and “The Girl on the Train,” also based on a bestselling novel. DreamWorks’ big screen adaptation of the 2012 bestseller “The Light Between Oceans,” directed by Derek Cianfrance and starring Michael Fassbender, Alicia Vikander and Rachel Weisz, does not yet have a release date.
Even with the cash injection from Jeff Skoll’s company, the challenges for independent studios like DreamWorks remain steep. The blockbuster craze that Spielberg helped spawn with films like “Jaws” and “E.T.” has come to dominate the industry, leaving scant space for the kind of thoughtful dramas that have become the director’s preferred themes. And the competitive field for adult films has become even more crowded with mainstays like the Weinstein Company being joined by well-funded upstarts like Broad Green Pictures, STX Entertainment and A24 Films.
The DreamWorks partnership also comes at a kind of tipping point for Beverly Hills-based Participant, the multi-media firm founded by in 2004 by former eBay executive Skoll. The company went through a rough patch in 2014 that culminated in the forced departure of CEO Jim Berk in April of this year. He resigned in the midst of complaints from staff members about his micro-managing style and lack of strategic planning. Skoll had come to feel that his company was not expanding enough into international markets and needed a clearer brand identity, as well as a game plan for either growing or divesting its nascent television channel, Pivot.
In October, Skoll hired former Universal Pictures chairman David Linde to succeed Berk as CEO.
Skoll considers Participant’s film operation to be a major strength of his operation and wants to expand its impact. He has long admired Spielberg and DreamWorks, supporting many of the studio’s previous films — including this fall’s “Bridge of Spies” as well as “The Hundred Foot Journey,” “Lincoln,” “The Help,” “The Fifth Estate,” “The Kite Runner” and “The Soloist.” Those pictures collectively garnered 17 Oscar nominations.
While the financial partnership provides some economic security for DreamWorks, the distribution deal with Universal is said to also be an important milestone for Spielberg. It represents a measure of comfort and career symmetry for the director, who launched his career at the studio and notched some of his biggest commercial hits there, including “Jurassic Park” and “E.T.” During months of rumors about the new distribution arrangement with Universal, friends said Spielberg had spoken warmly about Universal and mentors from his early years, specifically former studio chiefs Lew Wasserman and Sidney Sheinberg.
Universal’s parent company Comcast Corp. will not make an investment in DreamWorks, said people with knowledge of the matter. This will be a straight marketing and distribution deal. In an interview with Variety last month, Universal Pictures chairman Donna Langley and Filmed Entertainment Group Chairman Jeff Shell said the hope was that DreamWorks would be able to add a number of prestige titles to the studio’s annual slate that will appeal to older audiences.
“We’ve been consistent since the beginning that Steven Spielberg is a part of the fabric of our studio,” said Shell. “To have the honor of bringing him back would be wonderful.”