News: Analysis & Commentary: HOLLYWOOD
THEY'RE STUFFING MONEY THROUGH THE STUDIO GATES
Tucked in the shadow of MCA Inc.'s Universal Studios in Los Angeles, the small, adobe-style headquarters of Hollywood's newest studio-in-the-making is hopping. Nearly 60 staffers take meetings, do lunch, and sift through story ideas. Silicon Graphics CEO Edward R. McCracken has dropped by, as have officials of Bell Atlantic and South Korea's Samsung. Everybody, it seems, wants to do a deal.
The illustrious founders of DreamWorks, meantime, have been crisscrossing the country in search of financing. And now it appears that Steven Spielberg, Jeffrey Katzenberg, and David Geffen are on the verge of securing more than $2 billion in capital. While the trio has contributed an estimated $100 million and will control two-thirds of the company, they are wrapping up negotiations with Samsung Electronics Co. and others for up to $900 million in equity. Sources close to the group say a consortium that includes Bankers Trust New York Corp. is putting together a $1 billion line of credit.
"HOW CAN YOU LOSE?" DreamWorks' game plan: 12 movies a year by decade's end, along with TV shows, interactive games, animated films, and a record label. All that means partners. Capital Cities/ABC Inc. has already put $100 million into a joint venture to produce TV shows. McCracken wants DreamWorks to help Silicon Graphics develop a futuristic, digitized studio. Microsoft Corp. is negotiating to invest in the interactive-game unit, investment bankers say. And DreamWorks is talking to three pay-movie channels--Encore!, Home Box Office, and Showtime--about cable distribution deals. "All you do is look at their track record," says Encore! Chairman John Sie. "How can you lose?"
MCA, which distributes Geffen's records and several Spielberg films, hopes to do the same for DreamWorks movies and videos. But that may depend on whether MCA's Sidney J. Sheinberg and Lew R. Wasserman can cut new deals with MCA's parent, Matsushita Electric Industrial Co. Sheinberg's and Wasserman's close personal ties with Spielberg and Geffen are the key to any relationship MCA might have with DreamWorks. If they leave, MCA can forget about doing a deal.
Katzenberg, the former chairman of Walt Disney Co.'s studio, has meanwhile been lining up key talent. Singer Elton John, who performed and co-wrote The Lion King soundtrack for Disney, will likely do the same for a DreamWorks animated film. Gary David Goldberg, producer of TV hit Family Ties, has also signed on and has two pilots in the works. Helene Hahn, Katzenberg's top lawyer at Disney, has joined the team, as has former Disney Treasurer Michael Montgomery. Katzenberg went after Home Improvement creator Matt Williams, whose blockbuster show should earn $125 million this year for Disney in syndication fees. But Williams ultimately renewed his deal with Disney.
Film industry observers speculate that Katzenberg may also have eyes for Disney's Miramax Pictures, the "art-house" film company he signed to a five-year deal while still at Disney in 1993. Miramax earned 22 Academy Award nominations this year for such hits as Pulp Fiction and Bullets Over Broadway, and its feisty founders, Bob and Harvey Weinstein, have become the toast of Hollywood. One source says several interested parties have approached the Weinstein brothers about life after Disney. But unless Disney Chairman Michael Eisner lets them out of their contract, Miramax may be tied up for three more years.
Still, the DreamWorks cast is bound to expand even more this spring, when Geffen is freed from his MCA record deal. He's expected to lure Morris Ostin and Lenny Waronker, the legends who built Warner Bros. Records Inc. into a powerhouse before departing recently. Who's next? Hard to say. But Hollywood can't seem to get enough of Spielberg, Katzenberg, and Geffen.
In Their Dreams
Companies that may do deals with DreamWorks
SAMSUNG, BELL ATLANTIC With four others, they have emerged as possible investors. DreamWorks wants $900 million for a one-third interest.
BANKERS TRUST, CHEMICAL BANK May assemble up to $1 billion in credit.
ABC Invested $100 million in joint venture to produce TV shows.
SILICON GRAPHICS Looking to create a futuristic digital movie studio.
MICROSOFT Could invest in interactive games and movies.By Ronald Grover in Los Angeles