Platinum Studios (PDOS)

[Raggedy Man]

DreamWorks does a fast U-turn
Studio jumps ship to Disney after Universal stop
By TATIANA SIEGELMore

What’s got Hollywood confused is: Given the long-standing roots that DreamWorks principals Steven Spielberg and Stacey Snider each have with U, why Disney?

DreamWorks would have paid an 8% distribution fee to Universal, but could end up paying a higher distribution fee to Disney. Some estimate the Disney rate to be as much as 10%, though DreamWorks insiders insist that it falls in the 8%-9% range.

Disney will advance DreamWorks the P&A costs for the some 30 films covered by the five-year deal. But U was also onboard to front marketing costs, and that deal would have lasted seven years.

The only significant advantage that the Disney deal offered was a $100 million loan (DreamWorks execs concede that higher figures cited in the press are inaccurate). And perhaps that was the deciding factor for Spielberg, who had been forced to dip into his own pockets last month to pay for overhead and development.

No director likes to write multimillion checks, but Spielberg was particularly feeling the pinch. The financial losses at the hands of disgraced hedge fund manager Bernie Madoff didn’t help.

And if Disney really offers a better fit for Team Spielberg, the obvious question remains why DreamWorks didn’t ink a deal with the Burbank studio back in October, when former DreamWorks principal David Geffen negotiated with Disney on behalf of Spielberg and Snider.

That question left one DreamWorks exec stumped, explaining “I don’t want to revisit the past.”

In addition, the often rigid culture of Disney contrasts with one of familiarity at Universal. Spielberg’s ties with the studio go back to the 1970s, and Snider was an exec there for a decade.

Universal’s marketing and distribution staff offered Spielberg a known commodity, having released his passion project “Munich” and overcoming hurdles to help the film nab a best picture Oscar nom.

When DreamWorks and Universal hammered out their deal in October, both sides were feeling the love. Snider gushed, “Steven and I have both enjoyed successful, longtime relationships with Ron Meyer and everyone at Universal. …Steven and I are looking forward to this new association with our old friends.”

Still, DreamWorks execs say the Universal deal “just didn’t make sense any more.” They explain that the company’s needs had changed in an economic climate where cash is king. One DreamWorks exec likened the Disney deal to finding a better mortgage rate on a new home.

In talks with Variety, DreamWorks execs described Disney’s worldwide marketing and distribution operations as “world-class” — though U also has a vaunted machine for taking films into the marketplace domestically and abroad.

Had DreamWorks struck a deal with Disney in the fall, it certainly would have avoided alienating Universal. DreamWorks execs are quick to point out that the U deal was never signed, and the fledgling company was simply acting in its best interests.

But U executives counter that deal terms had been reached, and DreamWorks was obligated to disclose that they were negotiating with the Burbank studio.

DreamWorks says Snider and chief negotiator Alan Levine were very close to placing that call to Universal president Ron Meyer when the Disney news leaked in the press. As a result, DreamWorks’ deal with Disney has caused major fissures in the Universal relationship. And in an added ironic twist, DreamWorks will continue to keep its offices on the U lot, like a divorcee living in the ex’s poolhouse.

For better or for worse, DreamWorks is now in a new relationship with Disney and is looking to put the tumultuous past year behind it.

The company has more cash on hand than it did a month ago, and that coin will help push at least three films toward the production start line, including the thriller “Motorcade,” which Tom Cruise is circling. DreamWorks isn’t talking about budgets, though overtures to Cruise signal that the revamped company isn’t looking to make modestly budgeted pics.

Similarly, DreamWorks is negotiating with expensive stars like Steve Carell to star in one of its other close-to-go projects, “Dinner for Schmucks.” And Spielberg may direct the third likely-to-greenlight project, “The 39 Clues,” which is being penned by one of the director’s go-to scribes, Jeff Nathanson.

The company also held onto an additional 14 projects that were developed during DreamWorks’ tenure with Paramount, including “Atlantis Rising,” “The Trial of the Chicago 7” and “Cowboys and Aliens.”

DreamWorks has no time to waste. The company will have to quickly fill up its development coffers with new material if it wants to meet its target of providing making six films a year beginning in 2010. When Spielberg and Snider left their failed marriage at Paramount, they got custody of only the 17 projects in development and one production shingle, Parkes/MacDonald Prods.

That’s not a lot of dowry for a newlywed, but it’s a start.

http://www.variety.com/article/VR1118000159.html?categoryid=2520&cs=1