The story
Founded by David Geffen, Jeffrey Katzenberg and Steven Spielberg on Oct 12, 1994, in Universal City.1
Founding and Universal distribution (1994–2005)
The original company was founded following Jeffrey Katzenberg's resignation from The Walt Disney Company in 1994. Katzenberg approached director Steven Spielberg and music executive David Geffen about forming a live-action and animation film studio, which had not been done in decades due to the risk and expense, but all three were very successful. They agreed on three conditions: They would make fewer than nine movies a year, they would be free to work for other studios if they chose, and they would go home in time for dinner. They officially founded DreamWorks SKG on October 12, 1994, with financial backing of $33 million from each of the three partners plus $500 million from Microsoft co-founder Paul Allen, and $300 million from CJ Group heiress Miky Lee, giving the CJ Group an 11% stake in DreamWorks; the deal was also initially understood to include distribution rights to DreamWorks films across Asia excluding Japan, although CJ ultimately handled rights for only China, South Korea and Hong Kong, with all other international territories handled by United International Pictures (UIP). Their new studio was based at offices on the Universal Studios Lot, in the same bungalow as Amblin Entertainment. Despite access to sound stages and sets, DreamWorks preferred to film motion pictures on location. Usually, however, the company would film in a soundstage or set in a major studio. Shortly after DreamWorks was founded, the media dubbed Spielberg, Katzenberg and Geffen as "the three amigos". Despite Geffen's initial investment, it was reported in October 1994 that DreamWorks would only produce live-action and animated films, television programs and interactive entertainment. There were rumors that Warner Bros. Records CEO Mo Ostin might collaborate at DreamWorks with Geffen, who himself was still contracted to work at Geffen Records. The company eventually expanded into music once Geffen stepped down from Geffen Records in April 1995, and Ostin would be hired as leader of DreamWorks' music operations that October. By 1998, DreamWorks was labelled as "multifaceted entertainment", with the company describing its ambition in 1997 as being to nurture creative breakthroughs in "every field" of entertainment.
In December 1994, DreamWorks Television was formed after DreamWorks agreed to a $200 million seven-year television production joint venture with Capital Cities/ABC. The company was set up to produce series for broadcast networks, cable channels and first run syndication, with no first-look guarantee for ABC, but financial incentives favored the network. Their first show, Champions, was scheduled as a mid-season replacement for ABC. Dan McDermott was named the division's chief executive in June 1995. DreamWorks Television's first success was Spin City on ABC, the parent company of which was bought by The Walt Disney Company in February 1996. In 2002, the DreamWorks joint venture agreement with ABC ended. That agreement was replaced by a development agreement with NBC, with a first look clause. In September 2013, DreamWorks Television merged with Amblin Television.
In 1995, traditional animation artists from Amblimation joined the new studio, which led to DreamWorks buying part of Pacific Data Images (PDI), a company specializing in visual effects, and renaming it PDI/DreamWorks in 2000. Both were software divisions and would merge later on. By then, DreamWorks had the traditional animators working for their animation department, and the computer animators worked on CG films. Amblimation shut down in 1997 and all 250 of Amblimation's crew members went on to join DreamWorks Animation. The same year, DreamWorks Interactive, a computer and video game developer and joint venture between DreamWorks and Microsoft, was founded. DreamWorks Interactive was intended to eventually form synergies with the animation, film and television divisions of DreamWorks, with Geffen speculating in April 1995 that it could also possibly form synergies with DreamWorks' upcoming music division. With DreamWorks losing interest in maintaining a video game division, Electronic Arts (EA) acquired the Los Angeles studio of DreamWorks Interactive from DreamWorks and Microsoft on February 24, 2000, acquiring the intellectual property and rights of the acclaimed series Medal of Honor from Microsoft/DreamWorks.
In June 1995, DreamWorks announced that it had signed a $1 billion deal with MCA Inc. (then parent company of Universal Pictures) to distribute its theatrical releases in other countries and its home video releases worldwide over 10 years. MCA also bought a 2% stake in the company for $54 million.
In 1996, the company's record label, DreamWorks Records, was founded, the first project of which was George Michael's album Older. The first band signed to the label was eels, who released their debut album Beautiful Freak that year. DreamWorks Records went on to sign established artists for their label, including the alternative rock act Morphine, comedian Chris Rock (as a spoken word artist) and Henry Rollins (as both a spoken word artist and a member of Rollins Band). The label helped launch the careers of artists such as Alien Ant Farm, Elliott Smith, Nelly Furtado and Papa Roach. Once the main film division officially commenced in 1997, the label started releasing numerous soundtrack compilation albums for live-action and animated DreamWorks films, including American Beauty, Road Trip, Shrek, Small Soldiers and The Prince of Egypt, among others. These albums mostly consisted of songs from artists signed to DreamWorks Records, with the films themselves also using songs from DreamWorks artists; an example being American Beauty, which had eels' song "Cancer for the Cure" and Elliot Smith's song "Because" in both the soundtrack album and the film. The label's most commercially successful release was Papa Roach's Infest, which sold 7 million units on the back of the rap rock movement, while some of the label's highest-charting songs included Nelly Furtado's "I'm Like a Bird" and Alien Ant Farm's cover of Michael Jackson's "Smooth Criminal". Commercially, the record company as a whole never lived up to expectations, and was sold in November 2003 to Universal Music Group, who closed it at the beginning of 2005. Until September 1, 2005, UMG continued to operate DreamWorks Nashville, a country-focused division of DreamWorks Records which was founded in June 1997. That label was shut down when its flagship artist, Toby Keith, departed to form his own label.
In 1997, DreamWorks released its first three live-action movies; The Peacemaker, a film about terrorism; Amistad, Spielberg's first film for the studio about an African slave rebellion and the aftermath of the massacre; and Mouse Hunt, the studio's first family-friendly live-action movie about two brothers trying to fight a mischievous mouse. All three of these films were relatively successful, managing to outgross their budgets by moderate margins, with Mouse Hunt being the most profitable of the three. Amistad's score was composed by John Williams, a frequent Spielberg collaborator who also composed the music used for DreamWorks Pictures' opening logo. This logo debuted in The Peacemaker, the first of the three movies to be released, and has appeared on all live-action DreamWorks Pictures movies ever since, as well as on all DreamWorks Animation films from 1998 until 2003. Williams' score for Amistad and Hans Zimmer's score for The Peacemaker were both released on albums by DreamWorks Records in 1997, although starting in 1998, the label usually only released background score albums for DreamWorks' most high-profile titles, such as Thomas Newman's score for American Beauty and Williams' score for Saving Private Ryan. DreamWorks Interactive did not create video game tie-ins for The Peacemaker, Amistad or Mouse Hunt, and 1998's Small Soldiers was the only DreamWorks title to ever be directly adapted into a video game by DreamWorks Interactive.
In 1998, the United States 9th Circuit Court of Appeals upheld a lawsuit against DreamWorks for trademark infringement by Dreamwerks Production Group, Inc., a company mostly specializing in Star Trek conventions. That same year, DreamWorks released its first two animated movies, Antz and The Prince of Egypt, both of which are produced by DreamWorks Pictures and DreamWorks Animation distributed by DreamWorks Distribution. DreamWorks Distribution continued to distribute DreamWorks Animation productions through their distribution name until 2004. DreamWorks Animation films were generally targeted towards younger audiences, in contrast to the more adult-oriented live-action DreamWorks Pictures films, including films with strong sexual elements such as American Beauty, Road Trip, and EuroTrip, which shared the same branding through to 2004. DreamWorks also had another division called DreamWorks Television Animation, which in 1998 produced Toonsylvania and Invasion America. However, it quickly folded and the later animated show Alienators: Evolution Continues (based on the 2001 live-action DreamWorks film Evolution) was instead handled by the main DreamWorks Television division, in association with DIC Entertainment and other parties. Michael Jackson's brother Jermaine Jackson subsequently claimed in 2003 that DreamWorks' icon of a boy fishing and sitting on a moon crescent was plagiarized from the entrance to Jackson's Neverland Ranch. Spielberg was a friend of Jackson during the 1980s and appeared in his "Liberian Girl" music video. This was among the only animated content that Paramount Pictures acquired from DreamWorks when its parent company Viacom purchased the live-action film division and television division in 2006.
At the 71st Academy Awards in March 1999, DreamWorks Pictures' film Saving Private Ryan was the overwhelming frontrunner for the Best Picture Oscar. Directed by company co-founder Steven Spielberg, the film had received critical praise for its authentic portrayal of World War II, and was a commercial success. However, in one of the most famous upsets in Academy history, the award was instead given to romantic comedy Shakespeare in Love, from Disney-owned Miramax, a studio which won numerous other Oscars in the 1990s and 2000s. The loss is widely attributed to an aggressive and unprecedented awards campaign by Miramax and its head, Harvey Weinstein. It included a reported "whisper campaign" to downplay the merits of Saving Private Ryan. Ironically, Shakespeare in Love and Saving Private Ryan both ended up becoming part of the same corporate umbrella via Paramount Pictures' acquisition of the live-action DreamWorks film library in 2006, and its acquisition of the Miramax library in 2020.
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Following its defeat to Miramax, DreamWorks won three consecutive Academy Awards for Best Picture between 2000 and 2002, for American Beauty, Gladiator and Beautiful Mind (the latter two were co-productions with Universal Pictures). By this point, DreamWorks were considered to be the first new major Hollywood motion picture studio since RKO Pictures was founded in 1928. Go Fish Pictures, a division of DreamWorks with the objective to distribute art-house, independent and foreign films, was founded in 2000. The division experienced success with the anime films Millennium Actress (2003) and Ghost in the Shell 2: Innocence (2004), respectively, which led them to venture into releasing live-action films, with the release of The Chumscrubber. However, The Chumscrubber was a commercial and critical failure, which led DreamWorks to shut down the division in 2007 shortly before the release of the Japanese film Casshern (which was distributed by DreamWorks). The library of Go Fish Pictures was included when Paramount Pictures acquired DreamWorks' live-action film library in 2006, even though it mainly consisted of the American distribution rights to the aforementioned anime titles.
In 2000, DreamWorks was planning on building a studio backlot after buying 1,087 acres of land in the Playa Vista area in Los Angeles. It was to be complete with 18 sound stages, with many office buildings and a lake. There would also be new homes, schools, churches, and museums. The project was to be completed in 2001, but was canceled for financial reasons. In April 2001, DreamWorks and Universal Pictures (through its new parent company Vivendi Universal) announced that they had extended their distribution agreement for an additional five years, following the commercial successes of Gladiator and Meet the Parents the year prior, both of which were co-produced by DreamWorks and Universal. In January 2002, DreamWorks signed a deal with In Demand.
For the period beginning October 1, 2004, to January 31, 2006, DreamWorks Pictures distributed its films in the North American domestic theatrical and worldwide television market, with international theatrical and worldwide home entertainment distribution by Universal Pictures. On October 27, 2004, DreamWorks Animation was spun off into a separate public company.
David Geffen admitted that DreamWorks came close to bankruptcy twice. Under Katzenberg's watch, the studio suffered a $125 million loss on the 2003 animated film Sinbad: Legend of the Seven Seas, and also overestimated the DVD demand for Shrek 2, with 5 million unsold DVDs. In 2005, out of their two large budget pictures, War of the Worlds was produced as a joint effort with Paramount Pictures which was the first to reap a significant amount of profits, while The Island bombed at the domestic box office, but turned a profit internationally through Warner Bros. Pictures.
The 2003 Bo Welch film, The Cat In The Hat also released in this period and was a critical and commercial failure.
Paramount ownership (2005–2008)
In December 2005, it was announced the original Viacom, the then-parent of Paramount Pictures, agreed to purchase the live-action studio, still keeping the original name and producing/distribution name. The deal was valued at approximately $1.6 billion, an amount that included about $400 million in debt assumptions. Throughout most of 2005, DreamWorks Pictures was widely expected to be acquired by newly formed NBC Universal, parent of Universal Pictures and majority owned by General Electric (GE) (with the remainder owned by Vivendi as a result of GE's acquisition of a majority stake in that company's Vivendi Universal division which included Universal Pictures and related assets and merger of it with their NBC division to form NBC Universal). The transaction was viewed by industry analysts as a natural fit due to Spielberg's decades-long history with Universal Pictures and the fact that DreamWorks had utilized the Universal Studios lot for its headquarters and international distribution since its founding. Exclusive negotiations between DreamWorks and NBC Universal lasted for approximately nine months, with exclusive talks beginning in July 2005. By September 2005, the two parties had reportedly reached a verbal agreement for a sale valued at roughly $1.5 billion to $1.6 billion. However, towards the end of negotiations that month, GE attempted to lower their offer by approximately $100 million, and this last minute reduction angered Geffen. Another issue was that GE would effectively reduce DreamWorks Pictures to being a production label of Universal Pictures rather than a standalone company within NBC Universal. This was an unacceptable condition for Spielberg, who was far less involved with the negotiations than Geffen was. In late September 2005, it was speculated that talks between DreamWorks and NBC Universal might eventually resume at a later point. As the talks stalled, Viacom unexpectedly entered the bidding. Led by Paramount's new Chairman Brad Grey, they moved aggressively to propose their own offer in early December 2005. DreamWorks accepted Viacom's offer on December 9, 2005, with the deal being announced to the media two days later. In a public statement from December 2005, Spielberg said, "due to my very long history and my loyalty to Universal, I was saddened that after long negotiations and many compromises, we were unable to come to terms with Universal's parent company, GE." Regarding NBC Universal/GE, Geffen said in December 2005, "I think they thought we had no choice, and were going to squeeze us and squeeze us. After a year of dealing with them, they still did not have a concluded, finished contract ready to sign."
The acquisition of the live-action DreamWorks studio was completed by the second iteration of Viacom, which had recently split from the original at the end of 2005, on February 1, 2006. DreamWorks Pictures would briefly become a semi-autonomous label of Paramount Pictures. A key reason for Viacom's acquisition was due to a severe shortage in Paramount's own film production pipeline for 2006–2007, after Grey's new regime canceled many pre-existing projects. Spielberg and Geffen were still involved with the company under Paramount, although Geffen eventually departed in 2008 since he was interested in reinventing himself as a newspaper mogul. Katzenberg was now working at the newly independent DreamWorks Animation, and remained there until its sale to NBCUniversal in 2016, which left Spielberg as the only one of the three founders currently involved with either DreamWorks company. Viacom's 2006 purchase of DreamWorks Pictures included a separate deal for Paramount to distribute new films by DreamWorks Animation over a six-year period. Viacom also held the rights to co-produce television shows based on DreamWorks Animation characters, via their children's division Nickelodeon.
Starting in September 2006, DreamWorks Pictures and Paramount Pictures went on to co-release films such as Blades of Glory, Disturbia, Dreamgirls, The Last Kiss, Tropic Thunder and the 2007 live-action adaptation of Transformers. Despite internal tensions between DreamWorks and Paramount, the partnership led to Paramount becoming the highest grossing US studio of 2007. A point of contention was that Viacom owner Sumner Redstone viewed DreamWorks purely as a label of Paramount Pictures, whereas Spielberg did not view it as such, even resisting having new DreamWorks films being branded as Paramount films. In most of the Paramount-distributed DreamWorks films from this period, Paramount's logo only briefly appears at the very end of the credits, with the films usually opening with DreamWorks' 1997 logo. Notable exceptions are Dreamgirls and Transformers, which feature both the Paramount logo and the DreamWorks logo at the beginning. It was Spielberg who insisted, as part of the 2006 sale, that Paramount's logo appear on DreamWorks' movies after the credits to give DreamWorks' own banner top billing. In a 2007 Los Angeles Times article, an anonymous source said that Spielberg wanted to "carry the torch that DreamWorks should feel like its own studio." In 2007, Redstone said, "I understand how people like them, entrepreneurs who built companies and are creative geniuses, want a hell of a lot of autonomy. They're entitled to a lot of autonomy and [we] are committed to giving them that. We do not treat them as employees, we treat them as co-workers."
From Wikipedia’s article on DreamWorks Pictures, shared under CC BY-SA 4.0.4