Hollywood's hot new studio up and running: new series and ambitious plans for DreamWorks' future.

New series and ambitious plans for Dream Works' future

DreamWorks SKG is holding its own against more established competitors by focusing on its strength as a content provider. The new studio's password is, of course, SKG, in which "S" stands for Steven Spielberg, "K" for Jeffrey Katzenberg and "G" for David Geffen.

Hal Richardson, who heads DreamWorks' sales efforts, explained the company's strategy: "We look for product that we feel is compelling both artistically and commercially. We are not as interested in meeting specific budget guidelines." This goes in the face of industry trends over the last eight to 10 years, during which time the business process has increasingly dictated what creative choices are made. DreamWorks' unconventional operating style is possible because of a concerted effort to keep overhead down to a minimum (to the point at which the company almost seems underfunded) and the use of third parties to handle labor-intensive activities such as the international theatrical distribution of its films. The executives Video Age spoke to suggested that "Steven," "David" and "Jeffrey," as the founders are known, are easily accessible should the need for their participation arise. This informal style is reinforced throughout the organization by the practice of giving executives specific responsibilities but not titles. Can it be that glasnost has finally reached Hollywood?

Richardson, a former Disney executive, explained that there are four components to DreamWorks' television activities, loosely organized to focus on specific markets.

The Network Production Group, a 50/50 joint venture with ABC Television, oversees all of the company's network television production. Headed by Dan McDermott, the group currently has three series on the air: Spin City and High Incident on ABC and Ink on CBS. All of the series have performed well in their time periods. Other shows include a midseason order from ABC for an Arsenio Hall sitcom currently in production that may debut sometime in March.

The company's syndication and first-run activities are run out of DreamWorks Television, which is headed by Bob Jacquemin and Ken Solomon. Faced with a more competitive marketplace that is partly due to the loss of independent stations, DreamWorks has responded in an innovative way. The company has opted for more test marketing to fine tune shows for their target audience, hopefully improving the odds that they will be successful when they air on a wider basis. Majority Rules, a game show currently in development, is being tested in Phoenix and New Orleans. Said Richardson: "Doing it the other way doesn't make much sense, because by the time you get cleared in say 80 percent of the country, the creative people involved have gone on to other assignments, which means that you have to start from scratch with new people. We believe that our approach gives stations more of what they bargained for." Also in the works is a show starring Maury Povich and Connie Chung.

The DreamWorks Television Animation Group forms a distinct unit within the company's television divisions. It reflects a key corporate strategy: the production of a significant amount of television animation. Headed by Gary Krisel and Bruce Cranston, the group has three animated series currently in development for primetime television, an area in which historically there have been very few animated series. One of the series is Invasion America, a science fiction drama about aliens invading the world, scheduled to air this fall on the WB network.

Richardson doesn't feel that DreamWorks' lack of product relative to the other studios is a drawback. On the contrary, he believes that it is actually a plus, since more attention is given to the series and films DreamWorks does have. According to Richardson, there is so much interest in his product that, even without advertising in the trades, he has had a full schedule at the markets he has attended so far. The fact that DreamWorks is receiving a great deal of press coverage is also an advantage.

The strong demand for feature films mandates a word about DreamWorks' activities in this area. The potential for lucrative output arrangements exists. According to Richardson, the reputation of DreamWorks' creative team and the quality of the product are what attract broadcasters. He added: "Of course, it doesn't hurt that we are not in the distribution business, so that there are less thorny issues to overcome. Unlike our competitors, we are not interested in getting a piece of the equity platforms."

There are several projects on DreamWorks' theatrical movie slate. Principal photography was completed last fall on The Peacemaker, starring George Clooney and Nicole Kidman. A comedy called Mouse Hunt, starring Nathan Lane, will begin production by spring. And everyone is waiting for the sequel to Jurassic Park, The Lost World. As soon as Spielberg has finished working on that film, he will direct his first feature for DreamWorks: Amistad, a period drama about a slave revolt aboard a ship on its way to America. The story involves John Quincy Adams, who comes out of retirement to defend slaves accused of murder. Since animation is a critical part of DreamWorks' overall plan, it is hardly surprising that its new animation facility in Glendale is deeply involved in its first animated feature, Prince of Egypt, the story of Moses, which will be released in 1998.

DreamWorks has decided to handle its own domestic theatrical distribution, for two reasons. First, the principals recognize the importance of domestic success to the overall bottom line. Secondly, according to Richardson, new computer technology and the consolidation of screens under major theatrical exhibitors have lowered costs and made it possible to self-distribute without significantly increasing overhead.

So far, DreamWorks' strategy seems to have paid off. Some question marks that remain include the lack of a library, the reluctance to invest in marketing efforts and the possible impact on the ABC joint venture of a negative outcome in Katzenberg's Disney employee lawsuit. When asked about this last, Richardson was quick to point out that so far the lawsuit hasn't had any effect and that everything is proceeding according to plan. We tend to agree, because we see the company growing and reaching out to a variety of other partners, just as it reached out to CBS with Ink.

RELATED ARTICLE: Golden Dreams

No independently verifiable financial information is available on DreamWorks, since it is privately held. The estimates provided below were generated by internal sources. Apparently DreamWorks raised $2 billion in just a few months. A full $1 billion came as a line of credit from Chemical Bank (now Chase), and the remainder came from a group of investors. Of this latter billion, $500 million came from Paul Allen (formerly of Microsoft) in return for a 20 percent equity stake. Another significant piece, $300 million, came from the Ciel Group of Korea. Spielberg, Geffen and Katzenberg invested $33 million each. The balance came from other investors, including Bill Gates, chairman of Microsoft, who is reputed to have a 1 percent stake in the company.

Wall Street is bullish on DreamWorks. According to Chris Dixon of Paine Webber, the company's music and television divisions are performing on target. Dixon added that the storyboards for the animated film Prince of Egypt look very promising. He feels that the company is off to a great start, even though the live action area is lagging behind expectations because of Spielberg's prior commitments.