Online Extra: The Director's Cut

Steven Spielberg discusses the breakup with Universal, his new pals at Paramount, and, gasp, Indiana Jones 4

He is the most celebrated motion picture director of all time. But in December, Steven Spielberg was feeling unloved. After decades at Universal Pictures, where he made such monster hits as E.T. The Extra-Terrestrial and Jurassic Park, the superstar director could only watch as Universal's parent company General Electric (GE ) bid him and his Dreamworks studio adieu. After negotiating to buy Dreamworks' live-action business, GE had passed, and the studio that made films like Gladiator and Spielberg's Saving Private Ryan was headed to Paramount Pictures in a $1.5 billion deal.

Thus a new chapter has opened for Spielberg, who is under contract now to make films for Paramount and to help the Viacom (VIA ) unit launch a much-needed turnaround. The studio has also been wracked with controversy of late, including Paramount CEO Brad Grey's testimony before a grand jury investigating wiretapping by private eye Anthony Pellicano. Spielberg, who strongly supports Grey, talked with BusinessWeek's Los Angeles Bureau Chief Ron Grover about the new chapter in his life, some upcoming projects, and looking at Universal in his rearview mirror. The following are edited excerpts:

So what happened with Universal?

I thought all along that GE would buy [Dreamworks]. Universal is sort of my ancestral home, and I thought it was inevitable that they would renew our long-term partnership. I had been at Universal through six costly and mostly bloodless coups, and I wanted to stay. I thought we had a deal last summer.

I really don't know what happened. They were talking with David Geffen. But then GE decided they wouldn't bid. And Paramount just came in and swept us up and made us feel as if we were worth something. GE wasn't willing to match it. It was a bittersweet day.

I'm told they had to convince you to do the deal?

It's true. But the Paramount folks went out of their way to explain the deal and spent the day at my house. I had [Viacom Chairman] Sumner Redstone on the phone. [Viacom CEO] Tom Freston flew in. [Paramount CEO] Brad Grey was there. It's all about personalities. I have never met [GE CEO] Jeff Immelt. I know he is a brilliant man. But he never offered me a chance to meet with him. I was even willing to fly out to see him. And I liked what the Paramount people had to say.

I knew Brad for some time, and I was happy to work with him. He's a very hands-on kind of executive -and I mean that in a good way - not the kind of guy who gets in your way but the kind of guy who is always asking how he can help you. I like that. I wanted to work with a guy like that. Brad took a leadership role. He made sure that this deal would happen.

There's been a lot of talk about turmoil on the Paramount lot. What do you make of that?

What I am seeing is a lot of healthy excitement. There is a lot of youth and vitality to the place. It feels like a studio that is in the beginning of a turnaround to me. And we're glad to be a part of it.

Brad Grey has been the talk of the Hollywood rumor mill -- that things weren't working out for him. A lot of scuttlebutt.

I don't get it. Maybe Brad is just the new kid on the block and folks want to make him show he can run a studio. When Mission: Impossible III [opens] and is a huge hit, this will all evaporate. They have a really good slate of pictures. There is Nacho Libre and Oliver Stone's Sept. 11 film, and Over the Hedge from Dreamworks Animation. I think people should wait to see how well the films do first.

There has also been talk that you helped bring [former head of Universal Pictures] Stacey Snider over in case Brad doesn't work out.

That's an urban myth. I tried to hire her a whole number of times. She green-lit Zorro for me at Columbia. I wanted her to join me at Amblin, but she had a chance to go to Universal. I've always talked about working with her. After the GE deal didn't happen, she was reassessing her future. So I asked her to join us. I wish the scripts that I read had that kind of imagination.

I've heard that you're taking time off from directing. That can't be what Paramount was expecting?

I may take some time off from directing because there is nothing ready for me to direct, no script that is where I want it. But I'm definitely going to be working for Paramount. I'm very interested in Transformers, a film [directed by action director Michael Bay], which we're going to release next year. I think that will be a great, great film.

And Brad has asked me to take a look at the Paramount library, to look at some of the films that go back to 1931, to see if there is a way that we can revitalize them. I have found three or four that are kind of interesting. You have to find the book that it was based on, or some other treatment, so I don't know if we're going to make them. But I'm excited about the possibilities.

When are you going to direct another film?

I'm working hard to get Indiana Jones 4 into shape. That's a Paramount picture, and we have had 10 revisions of the script. Right now [War of the Worlds screenwriter] David Koepp is working on it, and it's getting close. I'd like to get it going for 2007. And I'd like do something from Doris Kearns Goodwin's book Team of Rivals, about Abraham Lincoln.

You'd better hurry on the Indiana Jones film. Harrison Ford says he's not getting any younger....

Harrison Ford is still strong enough to pull a PT Cruiser on his back.

There are a lot of lackluster films, and box office is bad. What's wrong with movies today?

I'm not really sure. I suppose it's that people have access to so many other interesting platforms to choose from for their entertainment. And I don't just mean the iPod or the Internet.

The biggest one of those, outside the Internet, I think, is the cell phone. People are doing so much more on their cell phones than just talking. But I still think that people crave the social experience of seeing a movie at a movie theater.

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