Viacom Chief’s Remark on Spielberg Stirs a Furor
By MICHAEL CIEPLY
LOS ANGELES, Sept. 20 — Philippe P. Dauman, the chief executive of Viacom, told an investment conference on Tuesday that his company and its Paramount Pictures and DreamWorks units would do just fine, even if DreamWorks lost the services of Steven Spielberg.
On Wednesday, Mr. Spielberg’s longtime ally and partner Jeffrey Katzenberg fired back during another session of the same conference in New York, defending the film director as a “national treasure.”
And by Thursday, the relationship of the corporate parent and DreamWorks — founded by Mr. Katzenberg and Mr. Spielberg along with David Geffen, then sold to Viacom in 2005 for $1.6 billion — was once again on the rocks, despite stellar success at the movie box office with pictures like “Norbit” and “Transformers” and a confounding lack of substantive disputes among the principals.
The exchange, featured in back-to-back articles on the front page of the trade paper Daily Variety, intensified already rampant speculation that Mr. Spielberg and Mr. Geffen would leave Paramount when their contracts expire at the end of next year.
Mr. Katzenberg, as chief executive of the separate DreamWorks Animation, does not have a personal contract with Viacom. But his company, best known for its “Shrek” franchise, has agreed to distribute its films through Paramount until early 2013, with an option to leave in 2011 if DreamWorks Animation undergoes a change of control.
Speaking by telephone on Thursday, Brad Grey, Paramount’s chairman, was eager to calm the waters stirred up by one of his bosses. “I have the greatest respect for the creativity of Steven Spielberg and the entire DreamWorks team, as well as the immense entrepreneurial business skills of David Geffen,” he said.
Mr. Grey added, “On behalf of Viacom and Paramount, I hope we’re all in business for a very long time.”
Other executives from the Viacom and DreamWorks camps declined to discuss the situation.
But a transcript of Mr. Dauman’s remarks supported the notion that Mr. Katzenberg — who reprimanded the chief executive for suggesting that Mr. Spielberg was “completely immaterial” to Viacom’s success — overshot, at least slightly.
Speaking before investors at the Goldman Sachs-sponsored conference at the Grand Hyatt New York, Mr. Dauman sang the praises of his company’s DreamWorks acquisition. He noted that it brought Paramount a much-needed roster of movies, an international distribution operation (allowing the studio to leave a longstanding joint venture it had used abroad) and a film library that immediately proved its value when the company found a George Soros-led group to invest roughly $1 billion in it.
Of Mr. Spielberg, Mr. Dauman said: “Now, we have Steven Spielberg in the house as part of the deal. He’s currently working on ‘Indiana Jones,’ a Paramount movie, which is releasing next year. We’re doing everything possible to make him happy.”
He added that Mr. Spielberg and “his team” had “the right to leave if they choose at the end of next year.”
Should that happen, he concluded, “The financial impact to Paramount first and especially to Viacom over all would be completely immaterial in the event somebody shows up to help them start a studio from scratch.”
That Mr. Dauman was using a Wall Street term of art — “immaterial,” that is, not an event that would have a measurable impact on reported earnings — was perhaps lost in translation when the phrase hit Hollywood ears.
Lost on no one, however, was the continued testiness in a corporate relationship that has, oddly enough, been poisoned by its own success.
From the point of view of Mr. Geffen it can only be galling to see DreamWorks, long derided as a hit-and-miss operation, achieve its greatest successes only months after a longtime corporate partner, the General Electric-controlled Universal Studios, failed to make an adequate bid for its acquisition.
Perhaps equally irritating, Mr. Geffen, who supported the hiring of the talent manager Brad Grey as Paramount’s chairman, must now watch Mr. Grey, justifiably, share credit for hit films that are building on decisions made years ago, and often in leaner days, at DreamWorks.
(Even while scolding Mr. Dauman on Wednesday, Mr. Katzenberg acknowledged that Paramount deserved “straight A’s” for its role in marketing and distributing the DreamWorks films.)
Melding the two companies has not been made easier by the peculiar geography of DreamWorks and its principals. Mr. Katzenberg works from an animation facility in Glendale, Calif. Mr. Geffen keeps an office on Paramount’s Hollywood lot, and Mr. Spielberg is still quartered in his famous adobe at Universal. If they are going to stay, Mr. Geffen and Mr. Spielberg will have to begin negotiations to renew their contracts in the coming months.
If not quite “material” in the formal Wall Street sense, the discussions nonetheless matter, especially because other members of the DreamWorks contingent, including Stacey Snider, the unit’s chief executive, could follow the co-founders out the door.
That would not do much to Paramount’s bottom line next year, given the studio’s growing supply of movies like “Iron Man,” in partnership with Marvel Enterprises; a new “Star Trek” from the director J. J. Abrams; and a number of DreamWorks films, including Ben Stiller’s “Tropic Thunder” that would remain, even if the senior players did not.
The studio would also probably maintain business ties with Mr. Spielberg for years to come without an executive contract, because it has acquired years’ worth of projects in which he has a creative interest.
In the way of Hollywood, of course, the current quarrel may simply be stage prep for some especially robust contract talks. Or matters of ego, and respect, may turn out not to be “immaterial,” after all.