Early Spielberg Mentor 'Saddened' By DreamWorks Deal

Dec. 12, 2005 &#151 -- Steven Spielberg started his career at Universal Pictures in 1974, when he was just 20 years old. But despite a fruitful relationship through the decades, a marriage was not to be between that studio and DreamWorks SKG, the studio Spielberg founded with fellow Hollywood moguls Jeffrey Katzenberg and David Geffen. In a surprise deal worth $1.6 billion in cash and debt, Paramount Pictures agreed to buy DreamWorks on Sunday.

The deal, expected to close early next year, will test the uber-director and producer's longtime personal ties to Universal. The studio gave Spielberg his start when executive Sid Sheinberg saw his short film, "Amblin," and offered the young director his very first contract. The relationship would go on to nurture some of Spielberg's best-known work, including "Jaws," "E.T.," "Schindler's List" and "Jurassic Park."

"I think he will always consider Universal his paternal home," says Sheinberg, who served as MCA/Universal's president and chief operating officer from 1973 to 1995.

But it was Paramount chairman and chief executive officer Brad Grey who ultimately snapped up the 11-year-old independent studio late last week in a frenzied courtship that reportedly culminated with sandwiches Friday morning at Spielberg's Pacific Palisades home. NBC Universal, a unit of GE, had been in talks to buy DreamWorks for the last nine months. But it reduced its offer at the last minute, which gave way to the successful 11th-hour bid by Viacom-owned Paramount.

The agreement also gives Paramount the right to distribute movies from DreamWorks Animation SKG, a separate public company not included in Sunday's deal.

In acquiring DreamWorks, Paramount will attach itself to one of Tinseltown's legendary names, and with it, the cachet that industry-watchers say is destined to raise its profile. With his mammoth box office draw, Spielberg has been referred to as a brand himself.

"Spielberg will be a magnet for Paramount to attract interesting and creative projects," observed analyst Dennis McAlpine of McAlpine Associates.

"You'll soon be able to tell a lot about who is hot in Hollywood by who will be bringing their projects to Paramount," he said. McAlpine predicted that many directors will think, "If Paramount is good enough for Spielberg, it's good enough for me."

Paramount says Spielberg and DreamWorks partner Geffen will be responsible for producing four to six live action films a year, which will boost its overall annual production from 14 to 16 titles annually. But Spielberg is expected to remain autonomous and continue working with other studios, as he has throughout his esteemed career. Still, Sheinberg, Spielberg's old boss and friend, believes the Paramount deal is somewhat bittersweet for his protege.

"He is a very sensitive fellow ... He is probably saddened by the deal. I certainly am," Sheinberg said.