It looks like animosity between Dreamworks and Viacom (VIA-B) is coming to a head, as information continues to leak out that Dreamworks is in negotiations to get out of the agreement with Paramount.
The news is Steven Spielberg and David Geffen have been in talks with NBC Universal (GE) since late this summer on moving to the company.
They also have contacted executives at News Corp. (NWS-A) and had a meeting, but there is nothing going on there as of this time, said the executives.
Negotiations with NBC Universal seem to have also hit a snag, as NBC wants Dreamworks to come up with their own outside financing, while NBC would do the distributing. Dreamworks is looking to be embedded in a studio and financed by them completely.
It's uncertain as to what Dreamworks is seeking as far as money goes, as someone from Dreamworks claims they're seeking the same as they did with Paramount - $400 million - while other people close to the deal say they're seeking between $600 million to $700 million.
Either way, this is a tough circumstance from the point of view of NBC Universal, as General Electric investors are pushing to divest of the company, which seems to be kept in the GE fold until after the Olympics in China. To make this type of deal could cause an uproar, and probably make the company harder to sell, if that's the direction GE takes with it.
Harold L. Vogel, an independent media analyst, accurately identified the problem that Dreamworks has, saying, “These DreamWorks guys are the A-Rods of the movie business. They have megawatt personalities and great track records, but almost nobody can afford to pay them.”
Dreamworks has struggled for years because they are led by creatives rather than those that can run a business. That means you spend the most money for me to express my creativity, in spite of the bottom line.
The other problem is Spielberg himself, who is given far too much respect in this regard. A business still must be profitable, regardless of the circumstances. Just because he's well known and is able to bring people to the theaters doesn't mean you can make money with him.
Sometime this coming week, David Geffen is going to meet with General Electric CEO Jeffrey Immelt, Jeff Zucker; CEO and President of NBC Universal, and Ron Meyer, Universal Studios president.
Talks are not related to Dreamworks Animation, which is an independent company run by Jeffrey Katzenberg. They have a deal with Paramount to distribute movies through 2012.
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