September
23Surreal Separation: Why Did DreamWorks Say Bye Bye to Par?
Dating back to the early days of the “dream factories.” Hollywood’s modus operandi always bordered on the surreal. That still applies today.
I will cite two examples:
Paramount and DreamWorks have essentially been in partnership for the past two years. For each, it’s been the best two years in their history.
So why are they splitting this week? Ask the principals and you elicit random explanations and expletives. The DreamWorks folks say they were ill-served and unappreciated. The Paramount folks say they’re thrilled to be rid of the DreamWorks overhead. DreamWorks wins back their autonomy but loses all the properties they put into development.
Many outsiders are scratching their heads. Together, they were a winning team and winners are hard to come by. Before Paramount acquired DreamWorks both entities were going through tough periods.
So why the split: The consensus comes down to this: Three parts ego, one part sellers remorse. DreamWorks feels it can do better with new financing and a new rent-a-system distribution deal, probably at Universal. And Paramount wants to strut its stuff now that it’s had time to mobilize its own slate.
The fact that it doesn’t make much sense to outsiders is, well, downright irrelevant.
Which takes us to the second issue. The economy is in meltdown. There’s a liquidity crisis across the land.
But if you scrutinize the pages of Daily Variety you’d assume this black cloud doesn’t exist. Money seems to be pouring into the entertainment business ---Ryan Kavanaugh’s Relativity Media claims it has $2 billion from hedge funds to invest in movies, Media Rights Capital says it’s locked in a three year $350 million revolving credit facility thanks to JP Morgan Chase and Comerica, Abu Dhabi is spreading a billion bucks around to various entities. And then there’s the DreamWorks financing deal with Reliance, an Indian group.
Why is money available to Hollywood but not to those industries that are more intrinsic to our economy? It goes back to the original premise. Hollywood’s modus operandi borders on the surreal.
And getting surrealer!
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Well, I know Dreamworks films have made money, but it makes a lot of films I wouldn't be proud of making, such as Norbit, Bee Movie, Disturbia, Over the Hedge, Tropic Thunder, The Ruins, Madagascar: Escape 2 Africa. They're so generic. Any studio or production company could have made them. That won't be the case with its deal with Marvel. Paramount has guaranteed itself five superhero blockbuster hits over the next couple of years.
Posted by: Dan Zee | 9/30/2008 2:04:12 PM
Thank you Mr. Bart for clarifying so simply the reasons for why DreamWorks and Paramount Pictures have decided to end their partnership. While many people may be confused as to why these companies would want to sever their ties, it makes complete sense that a company which has put out very successful films believes they could operate much more successfully with their own financing. I can understand your comment about DreamWorks setting up a new distribution deal with Universal, but I don’t really understand why the most likely candidate for setting up a distribution deal with DreamWorks is Universal. How did you come to that conclusion for a studio instead of a studio like MGM? Has either DreamWorks or Steven Spielberg commented on a possible distribution deal with Universal or is that merely speculation? The only other question I was left with after reading your post was ‘Who came out the victor?’ Will DreamWorks be able to sustain itself over a long-term period on its own? Will Paramount experience the reduction in overhead through losing DreamWorks like they projected? And finally, if neither party came out the victor, but this was a win-win for both parties, and both parties wanted out of their relationship, why didn’t this deal occur months and months ago? While I understand your posts are not intended to examine an issue in depth, I think some explanation on these issues would really help clarify a lot of questions that readers have.
Overall, I really enjoyed the post, and I especially like your overall conclusion about Hollywood and its role in our economy, that it really doesn’t make sense, and we shouldn’t always demand that they do, especially in the film industry. When has the film industry ever really made sense? I also agree, that no matter what happens to our country, people will always want to go to the movies. While you have no answer now, is this an issue that you see yourself re-visiting? Thank you again for your explanation.
Posted by: Teddy Riley | 9/30/2008 4:21:03 AM
For countless millions here and abroad, film going is a form of health care.
Posted by: Arye Michael Bender | 9/27/2008 2:56:55 PM
Mr Green omitted food from his list of industries that never slow down even in a depression. Food, entertainment, and healthcare.
Posted by: Lorenzo212 | 9/27/2008 9:19:11 AM
IT was best said years ago, from a Vulcan Friend of mine. "The Needs of the many outweigh the NEEDS of the one."
I believe if i heard the story right also, John Ford told Steven Spielberg, "Kid, never use your own money."
Paramount never liked the deal with Dreamworks, Paramount wanted out from day one.
Posted by: thomas p. douglas | 9/26/2008 12:34:41 PM
Clearly, the individuals involved from both companies did not get along well, regardless of profits. For creative filmmakers, a good personal relationship can be worth much more than profits. That's part of the eternal magic of the art of film.
Posted by: Arye (Leslie) Michael Bender | 9/26/2008 10:01:06 AM
There is a script called 95 North that I read and loved. I'm wondering if anyone has it?
Posted by: Greg Wright (Reader) | 9/25/2008 6:01:31 PM
I'm also hearing that a distribution deal with Disney is possible too. I think Dreamworks/Disney would be a fantastic partnership. Disney Studios will be able to continue producing Disney-branded films and Dreamworks could provide the more mature, adult-leaning fare.
Posted by: Bob G. | 9/24/2008 11:26:43 PM
I think the best two years for Paramount is 1997-1998.
Paramount released TITANIC during 1997-1998.
Posted by: Maria | 9/24/2008 9:47:27 PM
Weel said Mr. bart
Posted by: Cisco | 9/24/2008 7:51:05 PM
Rule number 1: never play with your own money. There are plenty of people that believe the dream and will invest. Something you have to think about, Hollywood is part of our foreign policy AND an export.
Posted by: Mr Brutal | 9/24/2008 4:10:32 PM
there are two industries that will not collapse (or even, necessarily, slow down) due to economic difficulties: healthcare and entertainment. money will always pour into the movie business. (if THAT ever stops you should run for the hills)
Posted by: alan green | 9/24/2008 9:32:42 AM