is launching its own
division, spelling a likely end next year to its longtime agreement to distribute movies for
The relationship between the two companies has been strained recently over how much DreamWorks pays the
One person familiar with the thinking of top executives at Paramount said the studio offered DWA Chief Executive Jeffrey Katzenberg a one-year extension to his company's deal, which expires in 2012, for the same fee DreamWorks now pays Paramount: 8% of film revenues.
After 2013, Paramount is only willing to accept a higher fee, the person said. Not coincidentally, the studio expects its new animation group to release its first movie in 2014, the same year it will demand better terms from DreamWorks.
Katzenberg is very unlikely to accept such an offer, as he has repeatedly told investors that he intends to seek a reduction in the fee.