DreamAmount No More.
"We congratulate Steven, David and Stacey, and wish them well as they start their newest venture. Steven is one of the world's great story-tellers and a legend in the motion picture business. It has been an honor working closely with him and the DreamWorks team over the last three years and we expect to continue our successful collaboration with Steven in the future.
To facilitate a timely and smooth transition, Paramount has waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company without delay.
The acquisition of DreamWorks has been beneficial both creatively and financially for Paramount and accelerated our strategy of focusing on our world-class franchises and brands. It gave us a solid slate of films to fill out our lineup, a valuable catalog we were able to monetize, and a development pipeline that will bear fruit for us for years to come. The acquisition jump-started our rebuilding plans, which are now well underway and include promising upcoming releases such as Star Trek by JJ Abrams, G.I. Joe by Stephen Sommers, Transformers 2 by Michael Bay, David Fincher’s The Curious Case of Benjamin Button, and Jon Favreau’s Iron Man 2, among many others.
The NYT smartly points out that the "goodbye" note comes before DreamWorks has made an announcement. It is only fitting, as Brad Grey has done every major deal in his time at Paramount - even getting to Paramount - in the press before the ink was dry, always looking for leverage.
So... who is left at Paramount from DreamWorks who will be jumping ship? Distrib chief Jim Tharp is unlikely, as DreamWorks is unlikely to be self-distributing. Marketing and publicity are already out. There is no significant development crossover. COO Jeff Small will presumably go to the adobe (has probably lived there from the start). It's unlikely that Kelley Avery, head of Home Ent, formerly at DW, now at Par, will jump, given that the DreamWorks footprint will be tiny in comparison to Paramount... and again, likely that DW will just distribute through a bigger studio.
(And there are still rumors of another major defection from Par that has nothing to do with DW...)
Anyway...
As I have said many times, the biggest loss in this deal, which gave glorious life to the financially troubled DreamWorks, is that Paramount has still not built a legitimate major studio production infrastructure in the nearly 4 years teat Brad Grey has been in charge of the studio. Berman to Weston to Lesher... and still looking for someone who has made money making movies.
There is no real surprise today. The Lesher move, earlier this year, anticipated this situation, as did Lesher's choice to dump Gerry Rich for his own peeps, the illusion of Par Vantage reimagining in business past the first of next year though there will be no infrastructure beyond acquisitions. The ranks are being closed. The Huns are at the gate.
Brad Grey's Paramount will live or die in the next 15 months.
But do keep in mind what Par is trying to ride to success. From their press release: "Star Trek by JJ Abrams, G.I. Joe by Stephen Sommers, Transformers 2 by Michael Bay, David Fincher’s The Curious Case of Benjamin Button, and Jon Favreau’s Iron Man 2."
Star Trek - No Star Trek film has ever cracked $150 million worldwide. There is a good chance that this new, JJ Abrams, fun and gun Trek will break that number. But the film reportedly has gone past the $150 million budget mark, meaning that $300 million worldwide is about the lowest worldwide gross the film can do and get to profit. Double the best ever for the franchise. But hey, Batman did it.
GI Joe – A franchise that has not had the cultural significance of Transformers in recent decades, yet greenlit at $170 million.
Transformers 2 – $200 million-plus budget, co-owned by DreamWorks (without investment) and big dollar one gross points to Exec Producer Steven Spielberg.
The Curious Tale Of Benjamin Button - It may win best Picture, but with a $150 million-plus production budget and WB taking foreign, it will need Troy or Mr & Mrs Smith or Ocean’s domestic numbers for Par to get close to it being a money maker.
Iron Man 2 – Not owned by Paramount. Once again, a distribution fee only. But this too will be insanely expensive.
Get the picture? With marketing, you’re looking at an investment of over a billion dollars on four movies next year (not including Marvel’s Iron Man 2, a 2010 title). And there are 5 other Par-only pics on the sched for next year.
But counting the films that the studios didn’t make profit-on-production with this year (Iron Man/Indiana Jones IV/Kung-Fu Panda/Madagascar 2), their best grossing year ever, the studio might get to $1.6 billion domestic and about $1.5 billion overseas.
If they can match this year’s numbers with next year’s movies (starting with Ben Button), they will have some profit. But let’s give Transformers 2 its $700 million again. Can any of the other movies match that? Top that?
Taking post-theatricals into account, theatrical numbers to make breakeven on the four pictures is somewhere between $1.7 billion worldwide and $2.1 billion worldwide, depending on how big a chunk the points players take.
Racers, start your engines…
Read the complete post at http://www.mcnblogs.com/thehotblog/archives/2008/09/and_so_it_ends.html