DreamWorks Dumps Universal for Disney?

Written by Sam Baltrusis

Friday, February 6. 2009 at 05:25 PM EST 1 comment

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After hashing out a much-hyped distribution deal with DreamWorks SKG in October, Universal Pictures today announced that Steven Spielberg's boutique production company is shopping elsewhere, fueling industry buzz that DreamWorks may ink a deal with Walt Disney Co. (NYSE: DIS).

Universal reportedly backed off after DreamWorks tried to renegotiate its deal to include HBO slots and additional production funds.

"Universal Pictures has ended discussions with DreamWorks for a distribution agreement," Universal confirms in a statement. "Over the past several weeks, DreamWorks has demanded material changes to previously agreed upon terms. It is clear that DreamWorks' needs and Universal's business interests are no longer in alignment."

Headed by Spielberg, chief executive Stacey Snider, and studio co-founder David Geffen, DreamWorks has been in talks with Universal for the past two weeks to renegotiate its original distribution deal that was inked four months ago after a tempestuous divorce with Paramount Pictures Corp.

According to Variety, the production group failed to raise money to match the $500 million invested in the company by Reliance Big Entertainment in Mumbai.

A deal with Disney, which announced earlier this week that its first-quarter profits fell 32 percent on lower DVD sales and a drop in advertising at its broadcast and cable properties, could be announced as soon as Friday.