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Spielberg Extracting and Reinventing DreamWorks By Year's End

by Alex Billington
June 10, 2008
Source: Hollywood Reporter

A very interesting set of articles hit Hollywood Reporter yesterday - both were focused on DreamWorks, Spielberg's production company currently nestled within Paramount Pictures. The first, DreamWorks Exit Could Hurt Paramount, nearly states outright that there is some turmoil between DreamWorks and Paramount Pictures and the less-than-expected performance of Indiana Jones and the Kingdom of the Crystal Skull might be the final straw. The second, Steven Spielberg has $1 Billion Dream, outlines Steven Spielberg's plan to reinvent DreamWorks as a completely new production company with a new distribution deal at a studio other than Paramount. However, there is a lot more to this situation than just that - there are contracts, relationships amongst executives, and of course the box office earnings.

As a recap, DreamWorks SKG was actually formed by Steven Spielberg, Jeffrey Katzenberg, and David Geffen, who make up the SKG at the end of the title. Paramount acquired DreamWorks in late 2005 for around $1.6 billion and has a contract with them that runs through 2010. However, Spielberg can apparently terminate the contract at the end of this year via an escape clause and it looks like he will. In preparation for this, Spielberg has not only begun the process of securing $1 billion in funding on his own, but has been shopping around DreamWorks. It was recommended he start a bidding war and now Universal, Disney, Fox and Paramount are all in the running.

This whole situation is a bit hazy and that's most likely because all of the bigwigs involved don't want to publicly discuss what's going on until it's all finished. In the first article, they focus on a separate question. "Spielberg and company now mulling their possible exit from Paramount, there's this more important question: What will Par do for film production if DreamWorks brass bolt the studio?" If Kingdom of the Crystal Skull doesn't hit $300 million, it's likely DreamWorks will have finally had enough. "A failure to reach that benchmark would be construed by many -- fairly or not -- as a significant disappointment and could further undermine the tenuous relationship between Spielberg and company and their current corporate bosses at Paramount."

In turn, Spielberg will leave Paramount entirely and possibly move DreamWorks to another major studio. Even I'm confused by the second article, because it presents two different scenarios. First: "Steven Spielberg aims to raise more than $1 billion in third-party financing to reinvent DreamWorks as a separate company that once again owns the movies it makes." Second: "As for distribution, Spielberg wants to bolt his roost at Paramount for Universal, which wants to land Spielberg and DreamWorks after losing out to Paramount in that quest a couple years ago." Unless I'm mistaken, it actually sounds like he's trying to achieve both of those. Meaning DreamWorks would be its own production company that would own all of its movies, but distribute them through Universal.

All of this is so confusing at the moment, that I'm not sure what else to say. There is even the bit about the name of DreamWorks, which is actually controlled by Jeffrey Katzenberg and DreamWorks Animation. But given he's on the side of Spielberg, he can withdraw rights to the name and give them to Spielberg instead. Either way, this DreamWorks situation will be interesting to follow as it develops over the rest of the year. Some of their biggest films include Saving Private Ryan, American Beauty, Galaxy Quest, Gladiator, Munich, War of the Worlds, Dreamgirls, Disturbia, and so on. DreamWorks is actually a powerful production company and one of the best in the world, considering Spielberg's involvement.

I'm sure Spielberg might not like to hear this, but I think Kingdom of the Crystal Skull is performing worse than expected because the movie itself was worse than expected. Everyone admits that it doesn't even come close to the level of the previous three and that's the problem. Paramount is typically fantastic at marketing successes - just look at Transformers or Iron Man. There are always bad apples that upset bigwigs and this time it was Indiana Jones. But unfortunately I can't say that moving to Universal is really going to help. Universal has recently been one of the most annoying with their marketing (The Incredible Hulk, Wanted) and their films haven't often performed phenomenally. So why move? Who knows what's going on in Spielberg's mind. However, I am very interested in seeing how it all turns out.

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Jim

I find it interesting that studio execs thought that Indy 4 would make over 300 million domestic. Ironman is seen as being hugely successful and it has made 288 million so far and has been out two weeks longer than Indy 4 which has made 253 million. What I also found interesting is that the kids I know either didn't like the movie at all or had no interest in seeing it and that may be why it hasn't grossed as much as was estimated. Another thing that might not have been considered is that this is Indy 4 and sequels generally don't do as well as the original film no matter how many decades you wait to film it. I personally was hoping for more of a Raiders of the Lost Ark movie and not a Temple of Doom or heaven forbid a Last Crusade. I think it was more in line with Temple of Doom, which for me was enjoyable but a tad too over the top and cartoonish but still there were a few scenes in Crystal Skull that were so absurd (Tarzan scene, fridge scene) that I stopped believing what I was seeing on the screen for a few moments, luckily there was so much going on that I was able to get past the movies faults.
Cory

I'm sorry, but when did 253 million dollars in 2 weeks become labeled as a disappointment. Crystal Skull, despite the varying opinions on it, still has another few weeks left in the tank at the box office and will come quite close to reaching 300 million domestically. This is insane to call that film a disappointment on a box office level. My goodness.
http://www.firstshowing.net Alex Billington

Cory, you're missing the point. Paramount and Spielberg were expecting Indiana Jones would make at least $300 million or maybe even $400 million. Sure $253 million is a lot, but the movie, with marketing and production combined, probably cost a lot more than that. It's a failure in their eyes because they thought this would be a huge hit and it wasn't. Spider-Man 3 on the other hand also cost upwards of $400 million to make (with marketing) and took home $336 million domestically / $890 million worldwide all before DVD earnings - that is a success for Sony.
Cory

Well, I still say 579 million worldwide after three weeks is nothing to sneeze about. Plus, Paramount and Spielberg may have overestimated the appeal of Indy, in terms of box office. I'm sorry but Indy was never in the same league as Star Wars, in terms of box office. Many may have thought that but it was never the case. I wonder what would make them think Indy was in the same league as Star Wars at the box office?
http://www.thestopbutton.com Andrew Wickliffe

"Paramount and Spielberg were expecting Indiana Jones would make at least $300 million or maybe even $400 million" Except Hollywood wasn't. Remember the analysis that said Lucas, Spielberg and Ford would never get their back-end deals and then the first week they did thanks to international?
Alfredo

regardless of $300 mil being a disappointment or not, it has nothing to do with Paramount. I think blaming the "lack of success" of Indy has everything to do with it not being a great movie in the first place. I've heard nothing but lukewarm to bad review of it from friends and family.
Kail

I say you're all jerks! Do any of you remember Zyzzyx Road? That movie only made $30 WORLDWIDE! Now that's THIRTY dollars not thirty million. Thats less than I make scratching my ass. I wouldn't be upset to take home $253 million, hell, I'd be smilin' big yella if someone handed me that for making a bad sequel.
http://handfulofwires.blogspot.com DCompose

Indy didn't make so much? Even the people who hated it paid for a ticket. And there's a lot of haters. Shizzle!
Jeff

It seems like Spielberg wants more independence and control. Maybe he's taking a cue from George Lucas.
http://movieguyreviews4u.blogspot.com Ryan

I agree with number 9. CRYSTAL will make $300M for sure but will probably stop at around $310M. I think Speilberg is just trying to come up with an excuse becuase like what Jeff said he wants more control which seems reasonable. Universal marketing is pretty awful. WB is alright and so is Sony. I think Disney and FOx are ace but Fox is better because they can sell ANYTHING. (Alvin and the Chipmunks=$217M).
Bry from Chi

Shoot..I thought Speilberg was made of money. Oh well. Off point....when I was watching Indy 4, I was wondering, how would Michael Bay make Indy. One thing for sure...there would be more explosions..yippee! Sorry..I'm a chick that loves to see stuff blow up. What can I say.
Bry from Chi

Oh...and one more thing. B.O as of June 15, 2008 US Domestic USD 276,4 million International USD 358 million Total USD 634,4 million Still nothing to sneeze at. I know that's not the point..but dang...if Indy did not crack 100 mil, THEN it would be a disappointment. This show is making serious coin. I wish I could just get one percent of this box office...then I can buy that pony I always wanted (a 1970 grabber green/black striped Mustang to be exact).