Universal ends distribution talks with DreamWorks

Fri Feb 6, 2009 3:54pm EST
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By Bob Tourtellote and Gina Keating

LOS ANGELES (Reuters) - DreamWorks SKG, the privately held movie studio controlled by Steven Spielberg, is in advanced talks on a film distribution deal with Walt Disney Studios Co, a source familiar with the talks said on Friday.

Universal Studios, Spielberg's longtime producing and distribution partner, said on Friday it had broken off "several weeks" of talks on a distribution deal after the smaller studio "demanded material changes to previously agreed upon terms."

In October, the two studios said they reached a deal for Universal to distribute films by DreamWorks in its new partnership with Reliance ADA Group of India.

At that time, DreamWorks said Universal was to take an 8 percent fee on a slate of roughly six films per year over the seven-year life of the contract, which begins this year.

A second source familiar with the talks said DreamWorks had been asking for new terms that were too rich and that Universal already had a full slate of its own films for 2009.

A Disney representative could not be reached for comment on reports that a deal could come as soon as Friday. A DreamWorks spokesman declined to comment.

Movie distribution deals can be very lucrative, with the distributor taking a flat percentage of a film's box office. In the case of DreamWorks and a movie like "Transformers," which had worldwide ticket sales of $708 million, the distribution fee easily runs into the tens of millions of dollars.

Disney showed its marketing and distribution prowess with its campaigns for films by Pixar Animation Studios, such as "Toy Story," before it acquired Pixar in 2006.   Continued...