Disney and Dreamworks Make A Deal: Movie Movie

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9/2/2009: Disney and DreamWorks Make a Deal

Disney logo Dreamworks logo

The long-term distribution deal agreed between DreamWorks and the Disney corporation was believed to be essentially the same as that agreed between David Geffen and the studio in the summer of 2008 before Steven Spielberg decided to move the studio back to Universal. Under the terms of the agreement, Disney would manage the distribution and marketing of DreamWorks’ releases through its Touchstone banner in return for 8% of each film’s gross and home video and television rights.

DreamWorks also negotiated under the terms of the deal a bridging loan enabling them to match the sum of $325 million raised by Mumbai-based Reliance to reinstate DreamWorks as an independent film company. At the time of the agreement DreamWorks said it was halfway towards matching the $325 million needed to match Reliance’s contribution.

Disney CEO Bob Iger said of the agreement, ‘The DreamWorks deal gives Disney the opportunity to leverage its global infrastructure without incurring further financial risk,’ while Disney chairman Dick Cook enthused, ‘We're both thrilled and honoured to be marketing and distributing all of DreamWorks' signature upcoming live-action motion pictures and to begin a new relationship with such respected colleagues as Steven, Stacey and their creative team at DreamWorks… Steven has made some of the biggest and most loved films of all time and continues to be one of the great icons of our industry.’

The move followed the collapse of talks between DreamWorks and Universal on Friday 6^th February 2009. Some reports suggested that the agreement was not finalised because DreamWorks couldn’t raise the finance required to match the sum put up by Reliance, and it was when this obstacle was encountered that DreamWorks began secret talks with Disney. A statement from Universal said the agreement collapsed because DreamWorks, ‘demanded material changes to previously agreed-upon terms,’ and added that, ‘It is clear that DreamWorks' needs and Universal's business interests are no longer in alignment.’ An industry blog even quoted a Universal executive as threatening legal action for breach of the original terms of the deal. [ADD]