Dream Works - History

History

The company was founded following Katzenberg's resignation from The Walt Disney Company in 1994. At the suggestion of a friend of Spielberg, the two made an agreement with long-time Katzenberg collaborator David Geffen to start their own studio. The studio was officially founded on October 12, 1994 with financial backing of $33 million from each of the three main partners and $500 million from Microsoft co-founder Paul Allen.

In 1998, the United States 9th Circuit Court of Appeals upheld a lawsuit against DreamWorks for trademark infringement on DreamWorks Production Group, Inc., a company mostly specializing in Star Trek Conventions. The same year, DreamWorks released its first full-length animated feature, Antz.

In 1999, 2000 and 2001, DreamWorks won three consecutive Academy Awards for Best Picture for American Beauty, Gladiator and A Beautiful Mind (the later two with Universal).

DreamWorks Interactive was a computer and video game developer founded in 1995, as a subsidiary of DreamWorks SKG. On February 24, 2000, Electronic Arts announced the acquisition of DreamWorks Interactive from DreamWorks and merged it with EA Pacific and Westwood Studios to form EA Los Angeles, now Danger Close Games.

DreamWorks Records was the company's record label, the first project of which was George Michael's Older album. The first band signed to this label was eels who released their debut album "Beautiful Freak" in 1997. The record company never lived up to expectations, though, and was sold in October 2003 to Universal Music Group, which operated the label as DreamWorks Nashville. That label was shut down in 2005 when its flagship artist, Toby Keith, departed to form his own label.

The studio has had its greatest financial success with movies, specifically animated movies. DreamWorks Animation teamed up with Pacific Data Images (now known as PDI/DreamWorks) in 1996, emerging as the main competitor to Pixar in the age of computer-generated animation and one of the few competitors to Disney in creating traditionally animated feature films. DreamWorks Animation has produced some of the highest grossing animated hits of all time, such as Antz (1998), The Prince of Egypt (1998), Chicken Run (2000), Shrek (2001), and its sequel Shrek 2 (2004), before it has been spun off on October 27, 2004 as its own publicly traded company.

In recent years, DreamWorks has scaled back. It stopped plans to build a high-tech studio, sold its music division, and has only produced a few television series, Las Vegas, Carpoolers and On the Lot, for example.

David Geffen admitted that DreamWorks had come close to bankruptcy twice. Under Katzenberg's watch, the studio suffered a $125 million loss on Sinbad: Legend of the Seven Seas, and also overestimated the DVD demand for Shrek 2. In 2005, out of their two large budget pictures, The Island bombed at the domestic box office, while War of the Worlds was produced as a joint effort with Paramount which was the first to reap the profits.

In December 2005, Viacom's Paramount Pictures agreed to purchase the live-action studio. The deal was valued at approximately $1.6 billion, an amount that included about $400 million in debt assumptions. The company completed its acquisition on February 1, 2006.

On March 17, 2006, Paramount agreed to sell a controlling interest in the DreamWorks live-action library (pre-09/16/2005; DW Funding, LLC) to Soros Strategic Partners and Dune Entertainment II. The film library is valued at $900 million. Paramount retained the worldwide distribution rights to these films, as well as various ancillary rights, including music publishing, sequels and merchandising. This includes films that had been made by Paramount and DreamWorks (the music publishing rights were later licensed to Sony-ATV Music Publishing when that company acquired Paramount's Famous Music subdivision). The sale was completed on May 8, 2006.

In June 2008, Variety reported that DreamWorks was looking for financing that would allow it to continue operations as an independent production company once its deal with Paramount ended later in the year. Several private equity funds were approached for the financing including Blackstone Group, Fuse Global, TPG Capital. and several others. But all passed on the deal given their earlier understanding of the Hollywood markets. Then most of the backing would come from an Indian investment firm called Reliance ADA Group. The DreamWorks trademarks are owned by DreamWorks Animation and the new company would need their approval to use the trademarks. In September 2008, it was reported by Variety that Dreamworks closed a deal with Reliance to create a stand-alone production company and end its ties to Paramount.