HOLLYWOOD, Calif., Dec. 11 /PRNewswire-FirstCall/ -- Paramount Pictures, a
unit of Viacom Inc. (NYSE: VIA and VIAB), has signed a definitive agreement to
acquire DreamWorks SKG for $1.6 billion in cash and assumption of debt. The
deal brings Paramount key assets, including:
-- All of DreamWorks' current projects in development;
-- An ongoing production partnership with Steven Spielberg and
-- An exclusive, worldwide distribution agreement with DreamWorks
Animation (NYSE: DWA) beginning in 2006;
-- DreamWorks' live-action library;
-- DreamWorks' television division and its properties; and,
-- Exclusive rights to future DreamWorks Animation characters in TV shows.
The announcement was made today by Brad Grey, Chairman and CEO of
Paramount also indicated that it is in advanced discussions with
identified investors to sell DreamWorks' film library, promptly after closing.
Paramount would continue to have distribution rights to the film library.
Agreement to Accelerate Turnaround and Growth at Paramount
The acquisition of DreamWorks dramatically accelerates the turnaround of
Grey said, "With the incredible talents of Steven Spielberg, Hollywood's
most gifted and respected director and producer, and David Geffen, the most
creative mind in show business, Paramount will be able to significantly
enhance its pipeline of groundbreaking motion pictures -- a key strategic
objective in restoring Paramount's stature as a leader in filmed
entertainment. Further, our new distribution partnership with Jeffrey
Katzenberg and DreamWorks Animation will be an important driver in building
our business internationally. All together, the worldwide marketing firepower
and creativity of the new Viacom brands like Nickelodeon and MTV make
Paramount an ideal home for DreamWorks and a fantastic partner for DreamWorks
Under the terms of the agreement, Paramount will acquire the entire
DreamWorks live-action library, which includes 59 films including such titles
as "GLADIATOR," "AMERICAN BEAUTY," both of which were winners of the Academy
Award for Best Picture, as well as such acclaimed Steven Spielberg-directed
blockbusters as "WAR OF THE WORLDS," "CATCH ME IF YOU CAN," "SAVING PRIVATE
RYAN" and "MINORITY REPORT," along with the upcoming Spielberg-directed drama
"MUNICH," produced in association with Universal Pictures. All DreamWorks'
development projects will also be acquired by Paramount as part of the
agreement, including "DREAMGIRLS," starring Eddie Murphy, Beyonce and Jamie
Paramount will also acquire the DreamWorks' television division and its
properties, including the long-running series (now in syndication)
"SPIN CITY," as well as current shows, including the NBC hit "LAS VEGAS."
"We couldn't be more excited about having Steven Spielberg and David
Geffen and the amazing roster of talent at DreamWorks join the Paramount
family, and we look forward to our new partnership with Jeffrey Katzenberg and
DreamWorks Animation," said Tom Freston, co-President and co-Chief Operating
Officer of Viacom. "This is a major milestone in our efforts to re-establish
Paramount as an industry leader and fuels the momentum for their emergence as
a real global film company. The world-class production, development and sales
teams we are gaining will certainly fuel the turnaround that Brad and his team
are leading. Overnight, this makes Paramount a key contributor to new
Viacom's revenue and earnings growth story."
Sumner Redstone, Chairman of the Board and CEO of Viacom, said, "The
acquisition of DreamWorks is an enormous step forward in our ongoing work to
unlock the full potential of Viacom's brands and businesses. The founders of
DreamWorks represent some of the most creative and respected executives in
this industry, and the talent and vision they will bring to Paramount cannot
be overstated. We can look forward to an exciting and successful future with
such a powerful team under one roof."
David Geffen said, "I have known Tom Freston for more than 25 years and
Brad Grey for almost as long and have tremendous respect for both of them. I
am excited and energized to be in business with them and look forward to a
successful new partnership. This is a great deal for both companies and for
our shareholders, investors and employees."
Steven Spielberg said, "I am thrilled by today's announcement of the deal
with Viacom/Paramount, who came recently to the table and were able to
conclude and sign agreements quickly. Due to my very long history and my
loyalty to Universal, I was saddened that after long negotiations and many
compromises, we were unable to come to terms with Universal's parent company,
GE. Nevertheless, I am truly looking forward to working with Tom Freston, Brad
Grey and Gail Berman, as this is an exciting opportunity for each of us to
embark on a new adventure together."
Jeffrey Katzenberg, CEO of DreamWorks Animation, said, "I am excited about
the benefits and new opportunities that the Paramount partnership brings to
our company. Brad and his team are a first-class organization and the chance
to work with Paramount and promote our movies on Viacom's network provides us
a unique platform to showcase our products and build our brand. DreamWorks
Animation is a company that strives to reach the broadest audience with its
films and now with access to Nickelodeon and the rest of the MTV Networks
brands, I believe we have a great partner for helping us achieve that goal."
Highlights of Transaction
Upon completion of the acquisition, the DreamWorks library is expected to
be sold to a third party investor, leaving Paramount with a greatly enhanced
distribution pipeline and an ongoing production partnership with Steven
Spielberg and David Geffen.
Mike Dolan, Chief Financial Officer of Viacom, said, "The sale of the
library allows us to reduce our investment in the transaction and enables us
to focus on our key objectives -- leveraging and strengthening our
distribution network through the addition of more 'A' level product and
creating stronger production partnerships. As always, we focused on financial
metrics that drive shareholder value, including discounted cash flows and
return on invested capital, and this transaction exceeded our hurdle rates.
Additionally, the transaction is accretive to net income and free cash flow in
2006. Pro-forma for the sale of the library, we will have accelerated the
turnaround of Paramount, while insuring adequate capital for tuck-in digital
growth opportunities and share buybacks going forward."
Also, upon completion of the acquisition, Messrs. Spielberg and Geffen of
DreamWorks will enter into new employment agreements in the respective roles
of producer/director and Chairman. Mr. Katzenberg will remain in his role as
Chief Executive Officer of DreamWorks Animation. As part of the new
organization, the production and development operations will continue under
the leadership of Mr. Spielberg and Mr. Geffen, who will be responsible for
producing 4-6 live action films per year of Paramount's total target slate of
14-16 films, which the company expects to achieve by 2006. Sales and other
infrastructure will be integrated with Paramount operations.
Additionally, Paramount will enter into an exclusive theatrical/home
video/television distribution agreement to release films from DreamWorks
Animation, the business unit spun off from DreamWorks as a public company in
2004, throughout the world for the next seven years. The first picture for
release under the new agreement is "OVER THE HEDGE," scheduled to open in
The purchase price of the acquisition will be financed by Viacom working
capital and committed financing facilities. The transaction is expected to
close in the first quarter of 2006, and is subject to expiration of regulatory
Press Teleconference Information
A conference call for members of the press will be held today at 4:00 p.m.
ET. You can participate by dialing 866-672-2663 (U.S.) or 973-582-2822
(outside U.S.) with conference call ID # 6822859. For those unable to listen
to the live conference call, a telephone replay will be available by dialing
877-519-4471 (U.S.) or 973-341-3080 (outside U.S.) and entering pin # 6822859.
The telephone replay will be available beginning December 11, 2005 at 6:00
p.m. ET and will run through December 18, 2005 at 11:59 p.m. ET.
Investor/Analyst Teleconference and Webcast Information
A conference call for investors and analysts will be held tomorrow,
December 12, 2005 at 8:30 a.m. ET. You can participate by dialing
866-672-2663 (U.S.) or 973-582-2822 (outside U.S.) with conference call ID #
6817940. The call will be available via Webcast by visiting www.viacom.com or
at http://www.vcall.com/IC/CEPage.asp?ID=98981. For those unable to listen to
the live conference call, a telephone replay will be available by dialing
877-519-4471 (U.S.) or 973-341-3080 (outside U.S.) and entering pin # 6817940.
The telephone replay will be available beginning December 12, 2005 at 11:30
a.m. ET and will run through December 19, 2005 at 11:59 p.m. ET. A slide
presentation will also be available in the Investor Relations section of
Viacom's Web site.
About Paramount Pictures
Paramount Pictures is part of the entertainment operations of Viacom Inc.,
one of the world's largest entertainment and media companies and a leader in
the production, promotion, and distribution of entertainment, news, sports and
About DreamWorks SKG
DreamWorks is a leading producer of live-action motion pictures, animated
feature films, network and cable television programming, home video and DVD
entertainment and consumer products.
About DreamWorks Animation SKG
DreamWorks Animation is principally devoted to developing and producing
computer-generated, or CG, animated feature films. With world-class creative
talent, a strong and experienced management team and advanced CG filmmaking
technology and techniques, DreamWorks Animation makes high quality CG animated
films meant for a broad movie-going audience. The company has released a total
of nine animated feature films, including "ANTZ," "SHREK," "SHREK 2,"
"SHARK TALE," and "MADAGASCAR."
Viacom is a leading global media company, with preeminent positions in
broadcast and cable television, radio, outdoor advertising, and online. With
programming that appeals to audiences in every demographic category across
virtually all media, the Company is a leader in the creation, promotion, and
distribution of entertainment, news, sports, music, and comedy. Viacom's well-
known brands include CBS, MTV, Nickelodeon, Nick at Nite, VH1, BET, Paramount
Pictures, Infinity Broadcasting, Viacom Outdoor, UPN, TV Land, Comedy Central,
CMT: Country Music Television, King World, Spike TV, Showtime, Paramount
Parks, and Simon & Schuster. More information about Viacom and its businesses
is available at www.viacom.com.
Earlier this year, the Company announced it would be separating its
businesses into two publicly traded companies, and expects the transaction to
be completed by the end of 2005. The new Viacom will own MTV Networks (MTV,
VH1, Nickelodeon, Nick at Nite, Comedy Central, CMT: Country Music Television,
Spike TV, TV Land and many other networks around the world), BET, Paramount
Pictures, Paramount Home Entertainment and Famous Music. CBS Corporation will
own the CBS Television Network, UPN, Infinity Broadcasting, Viacom Outdoor,
Viacom Television Stations Group, Paramount Television, King World, Simon &
Schuster, Showtime and Paramount Parks.
Information About the Separation of Viacom
This release contains information relating to the proposed separation of
Viacom into two publicly traded companies. In connection with the proposed
separation, Viacom has filed a Registration Statement on Form S-4, as amended,
with the U.S. Securities and Exchange Commission. Investors and security
holders are urged to read the Registration Statement and related materials
that are filed with the SEC because they contain important information about
the proposed transaction. Investors and security holders may obtain copies of
these documents, and other documents containing information about Viacom,
without charge, at the SEC's website at www.sec.gov and through Viacom's
Investor Relations at Investor.Relations@viacom.com.
Cautionary Statement Concerning Forward-looking Statements
This news release contains both historical and forward-looking statements.
All statements other than statements of historical fact are, or may be deemed
to be, forward-looking statements within the meaning of section 27A of the
Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934.
These forward-looking statements are not based on historical facts, but rather
reflect the Company's current expectations concerning future results and
events. Similarly, statements that describe our objectives, plans or goals are
or may be forward-looking statements. These forward-looking statements involve
known and unknown risks, uncertainties and other factors that are difficult to
predict and which may cause the actual results, performance or achievements of
the Company to be different from any future results, performance and
achievements expressed or implied by these statements. These risks,
uncertainties and other factors include, among others: consumer acceptance of
both future motion pictures and motion pictures in the Company's libraries;
competitive conditions in the marketplace for the Company's motion pictures;
the effects of technology and businesses enabled thereby and the impact of
piracy on the Company's products . The forward-looking statements included in
this document are made only as of the date of this document, and, under
section 27A of the Securities Act and section 21E of the Exchange Act, we do
not have any obligation to publicly update any forward-looking statements to
reflect subsequent events or circumstances.
SOURCE Viacom Inc