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DreamWorks’ credit problems

Studio's future unknown in economic climate

You know times are really tough when you start feeling sorry for Steven Spielberg.

Steven has had a demanding week. First, the Bernard Madoff scandal enveloped tens of millions of dollars from Spielberg and his philanthropies. Then there were the troubles at the newly re-financed DreamWorks.

Non-refinanced DreamWorks, that is.

It seems the credit crunch has even caught up with Steven. According to his business model, Reliance Entertainment of India was to come up with $550 million and the banks, led by J.P. Morgan were going to supply $750 million in funding. This would translate to some 35 movies over a period of seven years to be released through Universal.

Problem is the banks cannot come up with the money. That leaves DreamWorks struggling along on bridge financing but unable to proceed with it full slate of films.

Talk to the DreamWorks’ bankers and they’ll tell you the capital markets will loosen up in the first quarter of ’09. The worst case scenario, they say, is that the company’s funding will be raised in stages. DreamWorks will still make its movies, but its operations will be trimmed back.

Other sources are less optimistic. They believe that, given the economic mess, DreamWorks might become a re-run of Spielberg’s Amblin enterprise — a production company basically dependent on studio funding.

The DreamWorks struggle foreshadows the enormous stresses facing Hollywood at this moment of financial upheaval. The process of pulling together independent films could become nightmarish in ’09. Funding will be scarce and talent deals will be sharply scaled back.

And as for Spielberg, one wonders whether he and Stacey Snider wouldn’t have been better off hunkering down at Paramount, where their films were performing superbly and their financing problems were minimal.

I happen to love Steven’s movies. A few months ago he told me that, on two occasions, the process of running DreamWorks required three-year absences from the filmmaking process.

My advice (not that anyone asked me): Make your movies, Steven. Running companies (any companies) is too damned exasperating these days to command your superb talents.

* * *

The media likes to assault readers at this time of year with year-end summaries, predictions and random “best-of” lists and they’re coming hot and heavy this year (there aren’t enough ads to fill the space).

So let me start by congratulating The Economist for admitting that its crystal ball in ’08 was totally cracked. Its prognosticors last year at this time managed to get nothing right, including the prediction that Hillary Clinton would be heading for the White House.

Magazines like Time and New York filled their latest issues with “best-of” lists, and they were nothing if not idiosyncratic. In Time, critic Richard Corliss listed “Synecdoche, New York,” as the second best movie of the year (behind “Wall-E”), while New York called the film the “Best Mess” (I agree with New York).

Time conjured up lists of the Top Ten Break-Ups (Madonna and Guy Ritchie), Ten Top Fashion Faux Pas (Anna Wintour’s fossil dress) and even the Ten Top Bank Slogans (“What’s in your wallet?” from Capital One).

New York’s lists go for the truly arcane. Its award for the “best montage” goes to “The Brothers Bloom,” which hasn’t even been released yet (it got delayed till next year) and chose Mathieu Amalric for its list of “movie unforgettables” (he apparently played the black sheep in “A Christmas Tale”). New York’s choice of “best movie script” went to two Norwegian writers who wrote a film called “Reprise” that I didn’t happen to see (or hear of) and anointed “Ghost Town” as the “Best Movie You Didn’t See” (I saw it and would put it atop my list of “forgettables”).

Interestingly, very few publications are making lists of predictions this year. Apparently the last few weeks have proven too traumatic.

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