Moguls Opt to Retain Film Unit

DreamWorks SKG says it isn’t for sale, but for how long?

With talks with General Electric Co.’s NBC Universal collapsing over price, mogul David Geffen said Tuesday that he and partners Steven Spielberg and Jeffrey Katzenberg were not looking for another buyer for their 11-year-old live-action studio.

“We’re not going to investigate another sale,” Geffen said. “The company was not for sale. They came to us wanting to buy it.”

But Geffen has made no secret of his dislike for the volatile movie business, despite such critical and box-office successes for DreamWorks as “Gladiator,” “American Beauty” and “Saving Private Ryan.” Just this summer, DreamWorks was saddled with its costliest flop ever in director Michael Bay’s “The Island.”

Also, as a rule, stand-alone movie companies find it hard to stay independent in a business dominated by media giants. Witness Metro-Goldwyn-Mayer’s nearly $5-billion acquisition this year by a group led by Sony Corp.

Whether another media company would be interested in DreamWorks is unclear. Executives at rival companies said they were wary of paying the hefty price asked by DreamWorks, whose 60-title film library is far shallower than those of other studios. In addition, existing distribution deals between DreamWorks and Universal could complicate any potential purchase by a rival.

According to sources, DreamWorks and NBC Universal had agreed to a cash price of slightly below $1 billion, with the total value of the deal at about $1.5 billion with DreamWorks debt included.

Not included was DreamWorks Animation, spun off to the public last year.

But with an exclusive two-month negotiating window closing this Friday, talks collapsed. During a Monday night conference call with NBC Universal Chief Executive Bob Wright, Geffen said, he and his partners pulled the plug.

According to Geffen, the deal was “on the one-yard line” when NBC Universal told DreamWorks it wanted to reduce the price by less than 10% to about $900 million.

A source familiar with the talks, who declined to be identified for reasons of confidentiality, said the two sides were even further apart on price.

Spielberg, who was ambivalent to begin with, made the final call, Geffen said.

“It was their decision to change the price,” Geffen said. “It was [Spielberg’s] decision to say we’re not making the deal.”

Geffen speculated that Universal felt entitled to an adjustment in the wake of “The Island” and the disappointment “Just Like Heaven.”

Executives from GE and NBC Universal declined to address Geffen’s version. Nor would they comment on why the talks imploded, which was first reported in the Wall Street Journal.

But Wright has been tightening NBC Universal’s purse strings, demanding companywide cost cutting amid NBC’s steep ratings decline.

In a statement, Wright said, “Steven Spielberg is one of the most creative and successful directors and producers in the history of filmmaking. I have the highest respect both for him and for DreamWorks, and I look forward to many more years of continued collaboration.”

Universal was thought to be a perfect fit for DreamWorks and Spielberg, who for years has kept his offices on the studio lot.

Universal and DreamWorks have been in business since shortly after DreamWorks was founded, with Universal distributing DreamWorks films on DVD worldwide and in theaters overseas through the joint venture United International Pictures.

Universal also has a long history with Spielberg, to whom the studio gave a break as a young director.

Spielberg delivered such blockbusters as “Jaws,” “E.T. the Extra-Terrestrial” and the “Jurassic Park” franchise.

Geffen said DreamWorks might now look to change international distributors because United International Pictures, which releases films overseas for Universal and Paramount Pictures, is dismantling much of its operation.

Universal has an existing deal to distribute DreamWorks’ films and videos through 2010. DreamWorks can opt out of its international arrangement with United, but it would come at a cost.

Executives at DreamWorks and Universal are skeptical that talks could get back on track.

Still, some Hollywood executives who have sat on the other side of the table from Geffen know him as a tough and savvy deal maker, one who they say just might have ended the discussions as a negotiating ploy.

GE shares rose 37 cents to $33.64.