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Thu, Nov 13, 2003 - Page 12 News List

Dreamworks sells its music unit to Vivendi Universal

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Vivendi Universal SA, owner of the world's largest record company, agreed to buy DreamWorks SKG's music unit, which sells albums by artists including Nelly Furtado.

The companies also extended an agreement under which Universal distributes DreamWorks films and videos.

Universal and DreamWorks said in a statement that their film and video contract now will run through October 2010. Closely held DreamWorks, the producer of hit films including Shrek, was founded in October 1994 by director Steven Spielberg, former Walt Disney Co studio executive Jeffrey Katzenberg and music executive David Geffen.

"DreamWorks says, `If we can sell the music unit, which is not a major unit for us, then maybe we can get a better deal on the film side,'" said entertainment analyst Michael Goodman at Yankee Group in Boston.

DreamWorks' film releases also include Saving Private Ryan and American Beauty, as well as animated films such as The Prince of Egypt. The company doesn't operate its own distribution system and has relied on Universal's since it was founded.

DreamWorks films have generated US$232.2 million in ticket sales in the US and Canada this year through Sunday, according to box-office tracker Nielsen EDI. DreamWorks ranks No. 8 in domestic market share among Hollywood studios, while Disney is first with US$1.96 billion.

DreamWorks' distribution agreement, which began in 1995 and was extended in 2001, gives Universal worldwide theatrical and home-video distribution rights. The companies declined to comment on the terms of the extension.

"There's no question this is a very big deal for both sides," Vivendi Universal Entertainment president Ron Meyer said of the terms of the distribution agreement.

The companies have co-produced some films, including Oscar winners Gladiator and A Beautiful Mind, as well as this year's Seabiscuit.

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