Paramount Pictures on Friday said it agreed to sell its DreamWorks film library to billionaire financier George Soros’ investment fund and an affiliate of Dune Capital Management LP for $900 million.
Soon after Paramount purchased the Glendale movie studio in December for $1.6 billion in cash and debt, the Viacom Inc. unit began looking into selling off the film library to help finance the deal.
After the conversion of certain commercial agreements from debt to advances, Viacom expects a net purchase price for DreamWorks of approximately $600 million. The sale is anticipated to close in April.
Under the terms of the deal, Soros Strategic Partners LP and Dune Entertainment II LLC will acquire all 59 DreamWorks LLC live-action films released through Sept. 15, 2005. Soros will enter into an exclusive five-year agreement with Paramount to distribute the library.
Viacom will keep ownership of music publishing and certain other derivative rights associated with the library, including sequel and merchandising rights. It will also retain a minority interest in the entity holding the library assets.
Viacom also has held onto certain rights to reacquire the library, and Soros and Dune have the right to sell the library to Viacom, beginning at the end of the fifth year. The arrangement gives the parties certain rights to acquire the other’s interest in the library at fair market value at any time upon the triggering of certain undisclosed events.
In January, Soros was in exclusive talks to buy the film library, but the two sides initially failed to reach a deal. After the process was opened to a broader range of investors, the Soros came back with an improved offer, the Wall Street Journal reported.
“By significantly reducing our capital investment, this transaction materially increases our expected return on invested capital for the DreamWorks acquisition. Additionally, we retain all the strategic and operational benefits of the combination,” said Michael Dolan, executive vice president and chief financial officer of Viacom, in a statement.
