What was really going on between DreamWorks and Paramount? The contract conflict of course! I’m Realistic Fish Head with this excusive story. A few weeks ago, we told you including box office analysts that Paramount Animation will be taking place in 2014. We were surprised of this breaking story and we wondered what was happening between them and DreamWorks. We found the answer in the August 4th edition of the Hollywood Reporter as Dan Barry told us.
Dan (via Hollywood Reporter):
Can the rocky marriage between Paramount Pictures and DreamWorks Animation be saved?
Some top industry observers think so, though not because of love. Rather, they think the partnership between mutual antagonists Brad Grey at Paramount and DWA’s Jeffrey Katzenberg is too mutually beneficial to scrap: Paramount has done an effective job distributing all DWA films since 2006, and DWA movies like Kung Fu Panda 2 pull in big grosses (even when pundits declare that they underperform). Most important, these handicappers say, DWA seems to lack obvious alternatives.
The edgy relationship between DWA and Paramount took a big hit recently when Paramount declared a plan to form its own animation division. Grey blindsided Katzenberg with the announcement July 6, the first day of the annual Allen & Co. retreat in Sun Valley, Idaho, where both were in attendance. Paramount insists it is serious about having a homegrown animated film in theaters by 2014, but some outside observers think the studio would be foolish to bank on that.
The fight could be cast as a simple negotiation over the distribution fee DWA pays Paramount. Katzenberg is said to want a reduction from 8 percent to 7 percent when the current six-year deal expires in 2012, and Paramount wants a bump up. THR first reported Aug. 1 that the DWA board recently rejected a one-year extension of the existing arrangement, further prolonging the stalemate.
Clearly, Katzenberg will try to strike a deal elsewhere. But a Paramount source predicts that DWA will come up empty. This source says Paramount makes an average of $40 million to $50 million a year from the deal — not insignificant but not enough to kowtow to Katzenberg’s demands.
Fox, Sony, Universal and Disney have in-house or affiliated animation studios, making them less likely to pick up two or three DWA releases a year. Warner Bros., which has only dabbled in animation, has been cited as a possible suitor, but studio insiders have downplayed the possibility, leaving independent distributors or Katzenberg opting to self-release.
DWA declined comment, but an insider says the company has not made presentations to other studios and no one at DWA is “quaking in their boots,” adding, “Maybe we’re arrogant, but it’s not as if [DWA] is some loser company.” During its deal with Paramount, Katzenberg has delivered the Kung Fu Panda and How to Train Your Dragon franchises. Shrek the Third ($799 million worldwide) and Shrek Forever After ($752 million worldwide) are among the highest-grossing titles Paramount has released.
Still, investors have hammered DWA stock lately; analysts cite the Shrek franchise’s diminishing value and fatigue among U.S. audiences for 3D, which has boosted DWA grosses.
“Given the situation in the industry and the recent performance of DreamWorks Animation films, it may prove hard to get 8 percent again,” says Susquehanna Financial group analyst Vasily Karasyov.
Paramount animated movies probably will not be of the same quality as DWA’s, but the studio is banking on doing cheaper pictures that won’t need to pull in as much at the box office and beyond. The Paramount source says the cost of doing animation is going down and claims that Rango could be made today for $100 million. That film, released to positive reviews in March, supposedly cost $135 million, though some estimates run substantially higher. It grossed about $240 million worldwide, but outsiders say it lost a substantial amount when marketing and other costs are included.
Even with the bar set comparatively low, some industry veterans are dismissive. “Brad Grey is in for a rude awakening,” says one producer. “It’s not so easy. They’re saying they’ll have animated pictures by 2014. No way.” These observers see the studio’s announcement as nothing more than an attempt to allay Wall Street concerns if the DWA deal ends.
Given that the DWA-Paramount relationship outwardly makes so much sense, the acrimony clearly goes beyond the usual posturing over a deal. It dates to the contentious rupture between the live-action DreamWorks unit and Paramount in 2008. Even though DWA already had been spun off from DreamWorks into a publicly held company, Katzenberg was and continues to be allied with his fellow DreamWorks founders Steven Spielberg and David Geffen, who own stakes in DWA.
“What people don’t realize is how personal this rift is,” says a source with knowledge of the relationship.
But if Katzenberg can’t find a buyer or another distributor, former associates say he might have to stay put, even on less-favorable terms. “Jeffrey’s a pragmatist,” says one former colleague. “He’s not afraid to eat humble pie. He is the most resilient human being I’ve ever met.”
Which is just as well, considering how frosty the relationship has become. “Jeffrey wasn’t even invited to Brad’s wedding,” marvels the DWA insider, referring to Grey’s nuptials in April. “I mean, everybody in town was there.”
So in the end, it turned out that Paramount had won the battle after all. As for DreamWorks and its stock on Wall Street, we will now know it could be the end until we say farewell to it and its entire movie collection.
In other news, the pick for their newest episodes has come back! If you loved U-Pick Live in the early 2000’s, then you’ll love Nick’s Pick your new episodes week, where they’ll vote for their new episodes online and see which shows will be chosen. Each show such as Fan Boy and Chum Chum to The Penguins of Madagascar will be chosen with a new episode this week as picked by all Nick viewers.
Gene: The invasion continues as Rise of the Planet of the Apes stays #1 for the 2nd straight week. With the end of summer movie season approaching, this prequel not only rose to the top again but took down Glee the musical concert in 3D out of the box office’s top 10 with 28 million smackers along with 104 smackers overall to top off with it. Disney’s and DreamWorks new movie The Help places 2nd while Warner Bros. and New Line Cinema’s Final Destination 5 takes 3rd, Sony’s new movie 30 Minutes or Less takes 5th being out smurfed by the Smurfs in 4th. Will the Apes do more damage this week? Find out if one of next week’s movie can stop them from doing more!
It’s time to vote! Nick viewers will have a chance this week to vote for your favorite new episodes as Pick Your New Episodes Week begins Monday! This is Realistic Fish Head saying, make your picks count!