DreamWorks is dead

Steven Spielberg, David Geffen, and Jeffrey Katzenberg are selling DreamWorks SKG to Viacom for $1.6 billion. Viacom's studio division, Paramount Pictures, will get DreamWorks' library of about 60 films, including "Saving Private Ryan," "American Beauty," and "Gladiator," and Paramount will also get half the profits of any movie Spielberg makes at another studio.

What went wrong for DreamWorks? The prevailing theories:

• Profitability. DreamWorks could not survive because the costs of running a studio are so high that it's impossible to make a profit without other large revenue streams, such as a sizable DVD library.

• Bad management. The live-action studio was run, until recently, by Walter Parkes and Laurie MacDonald, a married couple who also produced several of the movies that DreamWorks released. Thus, the couple was busy on film sets producing its own movies instead of greenlighting other people's.

• Disparate ambitions. Katzenberg wanted to head his own studio (and now he does, at DreamWorks Animation); Spielberg prefers directing; and Geffen, a music guy, has never really liked the movie business. Spielberg and Geffen wanted the power and freedom of owning a studio, but not the burden of running one.

So will we see another sequel to Shrek? Yes, as a matter of fact. "Shrek 3" is coming in 2007. "War of the Worlds, Part II"? We hope not.

http://www.msnbc.msn.com/id/10415568/site/newsweek/?rf=nwnewsletter