Entertainment company Viacom Inc. said Friday it agreed to sell the film library of the recently acquired DreamWorks studio to an investment group led by financier George Soros in a deal that values the library at $900 million.
The 59 films in the library include “Gladiator,” “American Beauty” and “Saving Private Ryan.”
Viacom, which recently split off its broadcasting and publishing assets into separately traded CBS Corp., said the deal will complete the second stage of its acquisition of DreamWorks SKG Inc., the studio founded by director Steven Spielberg, producer David Geffen and former Walt Disney Co. executive Jeffrey Katzenberg.
The buyers are Soros Strategic Partners LP and Dune Entertainment II LLC.
Soros and Dune will acquire all 59 DreamWorks live action films released through Sept. 15 of last year, while Soros will distribute the library through an exclusive five-year agreement with Paramount, the company said.
Viacom will retain ownership of music publishing and certain other rights related to the library, including sequel and merchandising rights. The company also will own a minority stake in the entity holding the library assets.
Viacom will have the right to reacquire the library, and Soros and Dune will have the right to sell it to Viacom, beginning at the end of the fifth year after the deal. The parties also may acquire the other’s interest under certain conditions.
While full details of the deal were not disclosed, it’s likely Soros and Dune will look to get a return on their investment through licensing the film library’s content on DVDs, cable and worldwide television broadcasts, said Harold Vogel, media analyst and author of the book “Entertainment Industry Economics.”
“They’ll project how much each film can generate,” Vogel said. “The difficulty is, probably only the top 10 films generate 80 percent of the income.”
In December, Viacom’s Paramount Pictures unit agreed to buy DreamWorks SKG for $775 million in cash, plus $825 million in debt and other obligations. At that time, the studio said it would finance the deal by immediately selling the DreamWorks film library, which Paramount valued at between $850 million and $1 billion.
Viacom said Friday it expects the net purchase price for DreamWorks to be about $600 million after converting certain commercial agreements from debt to advances.
The sale is expected to close in April, pending closing conditions, the company said.
The distribution agreement with Paramount will automatically renew if Soros still owns the library after the fifth year, Viacom said.
Dune Entertainment is an affiliate of Dune Capital Management LP.