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Time for some DreamWorks interpretation

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The Big Picture appears Tuesdays in Calendar. Comments and suggestions can be e-mailed to Patrick.Goldstein @latimes.com.

Has there ever been a company that aroused greater expectations than DreamWorks? Launched in 1994 with the kind of giddy media fanfare not seen since astronauts landed on the moon, the company’s formation seemed to portend the dawn of a new showbiz era. After all, who could imagine a better salesman than Jeffrey Katzenberg, a cannier businessman than David Geffen and a more influential filmmaker than Steven Spielberg? The intoxication was contagious. Talking to reporters at the time, it was Spielberg who inadvertently referred to the new business as “our new country.”

Today the country -- ahem -- company occupies a far less lofty perch. Its record label, awash in red ink, was sold off. Its TV studio was transformed into a production company. Its video game division was sold, its Internet ambitions abandoned, its Playa Vista campus never built. Its animation business, which was spun off last year, has been staggered by DVD sales dips and a gaping Wall Street credibility gap. Despite several impressive years early on, since the end of 2002 the studio’s live-action wing has made an average of six movies a year, its hits outweighed by misses, most recently “The Island,” a costly $130-million flop.

In recent days the industry has been abuzz over the news that NBC Universal could acquire the studio, giving Universal the 60-odd films in the DreamWorks library, distribution rights for future animated pictures and the ability for Universal to continue its decades-long relationship with Spielberg. With Universal under pressure to make more movies, the deal has its merits, especially if Universal decides to create a new overseas distribution arm, where DreamWorks product would help fill the pipeline.

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I’ll leave those details to Universal chief Ron Meyer, who having watched Geffen orchestrate the sale of his record labels surely knows that he’s in for a grueling negotiation. With DreamWorks production chief Adam Goodman just receiving a new contract extension, it seems clear that if the company is sold -- still a big if -- it will continue to make movies. So consider this an assessment, not an obituary. Obviously DreamWorks has become a valuable brand -- it’s why Universal is seriously contemplating its $1-billion price tag. But in Hollywood there remains a great puzzlement over the career arc of this unique company, whose many achievements have never seemed to free it from a nagging sense of unfulfilled promise.

The thing DreamWorks did best in its early years was make quality films, from Spielberg’s “Saving Private Ryan” to the Oscar-winning hits “American Beauty” and “Gladiator.” As recently as 2002, the studio had success with Spielberg’s “Catch Me If You Can” and “The Ring,” a $40-million horror film that was a surprise hit. But outside of “Shrek” on the animation side, the studio never created a mega youth-culture franchise like “X-Men” or “Scary Movie” that pays for the inevitable flops along the way.

Even worse, many DreamWorks’ hits were burdened with huge budgets and hefty first-dollar gross payments to top-name directors and A-list stars. With a sizable percentage of the profits going to stars and filmmakers, films such as “Road to Perdition” ($95-million budget) and “What Lies Beneath” ($105-million budget) weren’t big profit centers for the studio, especially in years when costly animation projects including “The Road to El Dorado” and “Sinbad” tore gaping holes in its bottom line.

The biggest problem with DreamWorks is that it has always been run as if it were a production company, not a studio. Whenever I had lunch at its cozy Southwestern-style production offices on the Universal lot, I felt I was at a Santa Fe artist colony. The studio had little of the energy that fills the air a few hundred yards away at Universal’s production headquarters. This was by design. Katzenberg was the only partner who’d ever run a studio, but his energies were increasingly diverted into animation. Geffen has made no secret of his dislike for the movie business. That left live action in the hands of Spielberg, who viewed DreamWorks more as a filmmaker collective than a studio. But when you have $100 million-plus in overhead, you need to make more than six or so movies a year to cover costs. With 475 staffers in its live-action wing, DreamWorks is anything but lean ‘n mean -- Fox Searchlight puts out as many movies with a staff of 60.

Spielberg has been the studio’s greatest asset -- and impediment. He’s made great films, used his clout to give the studio a stake in his outside projects and provided invaluable council to filmmakers. But he never gave up his day job --he’s remained an independent contractor while being a partner in the company. He’s also largely responsible for DreamWorks’ insular culture. At other studios, executives assemble a slate of films spanning a wide variety of genres. Until recently most DreamWorks films reflected the tastes of Spielberg and his lieutenants, Walter Parkes and Laurie MacDonald.

While that may be great policy for a production company, it has kept DreamWorks, until recently, out of the mass-appeal business. I admire its devotion to grown-up movies, but for DreamWorks to flourish it has to balance its costly prestige films with low-budget date-night movies. (“Red Eye,” a Wes Craven thriller due next week, is a step in the right direction.) DreamWorks rarely took a leap with new talent. Instead of making edgy comedies like “Napoleon Dynamite” or “Bad Santa,” they released four straight Woody Allen movies.

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Too many projects with young stars fell apart, killed by DreamWorks’ agonizingly slow development process. The studio has had a deal with Ben Stiller for years with little to show for it. After seeing the studio initially pass on “Anchorman” -- DreamWorks had to buy it back at a premium after “Old School” was a hit -- Will Ferrell took his next projects elsewhere. The studio’s first two production chiefs, Bob Cooper and Michael De Luca, left, frustrated with their lack of autonomy.

Brought in specifically to help DreamWorks broaden its tastes, De Luca was overruled about making deals with talent virtually from the start. “I was told each and every deal had to go through Walter, despite what was in my contract,” he recalls. Before his first year was out, he says, he was asked to share his production presidency with UTA agent Nick Stevens, a deal that never happened.

De Luca made plenty of stinkers, but he also pushed for “Old School” and made “Anchorman.” And he lobbied to make “Sideways,” “The Motorcycle Diaries” and, with Adam Goodman, “DodgeBall,” a project DreamWorks had developed. Each time he was shot down. As for “DodgeBall,” which went on to be a big hit at 20th Century Fox, De Luca recalls, “Walter passed on it, saying, ‘What’s funny about ‘DodgeBall’? I always cop to my mistakes. It’s too bad some people can’t accept responsibility for theirs.”

Parkes disagrees. “Mike’s a tremendously talented guy, but in this case, neither he nor Adam advocated making [‘DodgeBall’].”

A gifted writer and producer, Parkes was, from the start, DreamWorks’ key decision-maker and Spielberg confidante. (He and MacDonald recently relinquished day-to-day responsibilities to focus on their producing deal, though they remain consultants.) For years even the smallest decisions were funneled through him. What industry-ites found more unsettling was that Parkes would essentially greenlight movies he was producing -- and take up to 5% of the film’s first-dollar gross -- a conflict unfathomable outside of Hollywood. At talent agencies all over town, the mantra was: If you want to get a DreamWorks movie made, put Walter and Laurie on it as producers.

For me, Spielberg’s justification for this arrangement perfectly captures the gestalt of DreamWorks, a company whose idealism and artistic ambition was accompanied by a sense of entitlement and insularity. “I want Walter and Laurie to be comfortable and happy,” he told Forbes in 2003. “Sometimes a good deal says, ‘This is what we think of you.’ ... It’s an elevating thing for them to know how much we believe in them.”

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Parkes insists he and MacDonald never greenlighted movies they produced. “Given our dual role at the studio, we’ve been very careful not to allow a situation in which there could be a conflict of interest. That’s why we have never given the greenlight to a movie in which we participated financially. In these cases, we would take ourselves out of the final decision, which would be made by Steven Spielberg.”

It feels apt that DreamWorks is poised for a new chapter in its history at the very time that Miramax, its old archrival, has undergone an even more dramatic restructuring. For years, the two studios have been the yin and yang of Hollywood -- the sweaty, streetwise hustle of the Weinsteins versus the smooth, soy-latte cool of SKG. Both studios have had peculiar dysfunctions. If it was often impossible to get a movie made at DreamWorks, it was often all too easy for Miramax to buy your film and then bury it. For years, the two camps crossed swords at Oscar time, largely because they were the only companies willing to aim higher artistically than their stodgier corporate rivals.

For that alone, we should offer a celebratory toast. In an era when most studios are content to scrape the bottom of the barrel, DreamWorks tried to shoot for the moon. The problem is that it often shot itself in the foot and never knew the difference.

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