Paramount Pictures to Purchase DreamWorks SKG for Approximately $1.6 Billion

Deal Brings DreamWorks' World-Class Talent, Content and Distribution to


Dec 11, 2005, 00:00 ET from Viacom Inc

    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
        David Geffen;
     -- 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 Pictures.
     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
 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
 summer 2006.
     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
 waiting periods.
     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 or
 at  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,"
     About Viacom
     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
     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 and through Viacom's
 Investor Relations at
     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