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Paramount Makes Deal to Sell DreamWorks Library

17 Mar, 2006 By: Stephanie Prange

Soros Strategic Partners LP and Dune Entertainment II LLC have inked a deal with Viacom Inc. to purchase the film library of Paramount Pictures' DreamWorks LLC.

The transaction values the film library at $900 million and completes the second stage of Paramount's DreamWorks acquisition. After the conversion of certain commercial agreements from debt to advances, Viacom expects a net purchase price for DreamWorks of about $600 million. The sale is expected to close in April.

Soros and Dune will acquire all 59 DreamWorks live-action films released through Sept. 15, 2005, and will enter into an exclusive five-year agreement with Paramount to distribute the library.

Viacom will retain ownership of music publishing and certain other rights associated with the library, including sequel and merchandising rights. In addition, Viacom will retain a minority interest in the entity holding the library assets.

Viacom has retained certain rights to re-acquire the library, and Soros and Dune have the right to sell the library to Viacom, beginning at the end of the fifth year, at the then-current fair market value. Additionally, the parties have certain rights to acquire the other's interest in the library. In the event that Soros continues to own the library after the fifth year, the distribution agreement with Paramount will automatically renew.

"After a thorough process that resulted in great interest for the DreamWorks film library, we're pleased to have reached an agreement with Soros and Dune that has outstanding terms for all parties and is well within our expected sales price range," said Michael Dolan, EVP and CFO of Viacom. "By significantly reducing our capital investment, this transaction materially increases our expected return on invested capital for the DreamWorks acquisition. Additionally, we retain all the strategic and operational benefits of the combination."

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