October 1, 2008
Steven Spielberg dreams anew
Over the last two weeks, lost amid Wall Street's financial turmoil, came the announcement that Steven Spielberg's DreamWorks was leaving Paramount, having found financing from The Reliance Anil Dhirubhai Ambani Group ("Reliance"), one of India's largest private companies. |
What does the fact that no American studio or financier made a better offer say about Spielberg, his dream company and the state of the movie business today?
What does it mean that Spielberg's other founding partners, David Geffen and Jeffrey Katzenberg, are no longer with the company?
We should consider this to be like one of those Hollywood sequels, where a brand name franchise is given a new, albeit different, lease on life. Call it "DreamWorks II: Spielberg Home Alone."
When I last wrote about DreamWorks in 2005, rumors abounded that it would be selling its movie studio to NBC-Universal. Here's what I wrote: "Regardless of whether the acquisition is consummated, it reflects a sad truth: Steven Spielberg, Jeffrey Katzenberg and David Geffen's dream of creating a modern major studio has failed."
Before I bloviate about the meaning of it all, let's begin by considering the storied history of DreamWorks. Once upon a time, more than a decade ago, the three amigos -- Spielberg, Geffen and Katzenberg -- sought to create a modern movie studio in Playa Vista (and even looked at locating it in the hangar where Howard Hughes' folly the Spruce Goose resided). Over the next few years, they abandoned the ambition and expense of creating a state-of-the-art studio lot, and, in quick succession, launched then folded a television department, a record label and a games division to focus on films and animation.
These growing pains were costly, and a decade after their launch, DreamWorks' investors, most notably Paul Allen, asked for some payback. In 2005, the animation unit spun off and went public, with Katzenberg at the helm. Then DreamWorks decided to sell its film unit, too.
A deal with Universal seemed the likely choice, given Spielberg's long relationship there (he continued to maintain his production offices there). But when Universal's financial people tried to drive a bargain, DreamWorks' partners found another buyer in Paramount. For Brad Grey, who had recently taken the reins there, this seemed a coup. To further spite Universal, DreamWorks poached Stacey Snider, Universal's former chair. It all seemed very smart. Sharp, shrewd, killer dealmakers -- just some of the words that came to mind at the time.
Fiasco and disaster should also have been on that list. The honeymoon was short-lived. Sumner Redstone, Viacom's majority shareholder, a man who does not easily give up what he believes is his (just ask his children), found himself at odds with Geffen, a man who is often paid very handsomely to give up what is his. It seems DreamWorks thought itself an independent studio serviced by Paramount, while Redstone thought he owned the studio. Although in public they fought and made up, in the end one could say they agreed to disagree.
When DreamWorks sold to Paramount, the deal also included its film library, which Paramount in turn sold to investors. By contrast, when DreamWorks sold to Reliance, Paramount announced that DreamWorks was free to take its executives and producer deals, but Paramount would hold on to an estimated 200 projects developed on its watch. What's more, Geffen announced he would not be part of the new enterprise. Snider became Spielberg's sole partner, even as Spielberg also remains free to direct projects at other studios, as has always been his deal.
According to reports in the New York Times and Variety, the Dreamworks executives and Paramount spent the first weekend in October finalizing the details of their separation.
There are still 200 Dreamworks projects developed while at Paramount; reports indicated 15 to 20 will go with Dreamworks, 15 to 20 are projects they will continue to work on jointly, and the rest will remain at Paramount with no Dreamworks participation.
Executives from both sides declined to say which projects fall into which categories.
The new DreamWorks faces a very changed movie environment. We are at a moment when it is less risky to make a $200 million movie than it is to make a $10 million one (and the return is potentially greater); when indie dramas -- well-meaning, well-made, well-acted serious dramas -- fail because no one goes to see them, and when no one wants to see movies with subtitles.
The studios, for the most part, have become marketing machines for films that fall into recognizable categories: comic books, sequels, graphic novels, mid-priced comedies, broad family movies, animation and the occasional romance and/or romantic comedy (all with high-concept, easily marketable hooks).
For me, and many of my fellow producers, the business has become much more difficult. In 1997, when I was an executive at a production company on the Universal lot, there were more than 350 production deals at studios. Today there are fewer than 174 deals (and there will be even fewer than that when DreamWorks thins out their ranks).
I can't tell you that the movies produced then are better than what is on screen today. But they certainly are not worse. The net effect is that for many producers and executives, a whole middle swath of the film business is gone.
At the same time, the barrier to entry for independent (non-studio financed) movie making has become ridiculously low -- and the unexpected result is not that more good movies are being made, but that so many, many, many movies are being made -- thousands and thousands submitted to film festivals -- that there is a glut, and many movies, even good ones, go unreleased. In this era, the big studio film is more powerful than ever.
Which tells you something about this new incarnation of DreamWorks.
The new DreamWorks will, I'm guessing, remain among the upper-tier of producing entities. It will attract talent because of Speilberg and Snider, and because it can write checks. But should Snider fail in some way, or should the relationship with Reliance sour, Spielberg can continue to be, well, Spielberg. That is the point.
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