DreamWorks Animation, Paramount Sign Distrib. Pact

With the news of Paramount Pictures’ $1.6 billion purchase of DreamWorks SKG comes word that Paramount has secured worldwide rights to distribute DreamWorks Animation productions through 2012. The seven-year agreement covers theatrical, home entertainment and television releases, and is conditioned on the closing of Paramount’s acquisition of DreamWorks Studios, which currently handles distribution for its publicly traded toon unit.

Paramount will earn the same 8% distribution fee that DreamWorks Animation previously paid to DreamWorks Studios. In return, DreamWorks Animation will receive $75 million in cash, which it plans to use to repay debts following a year marred by losses.

“We are pleased with the benefits this new relationship provides DreamWorks Animation,” comments studio CEO Jeffrey Katzenberg. “The existing talent of DreamWorks Studios and the resources available at Paramount Pictures will result in a very strong distribution partner that will create great opportunities for our products in the marketplace.”

Under the new agreement, DreamWorks Animation will retain a certain level of control over the marketing and distribution of its films, and will also be afforded promotional opportunities over such Viacom television outlets as Nickelodeon, MTV, Nick at Nite, VH1, BET, TV Land and Comedy Central.

DreamWorks Animation will host a conference call and webcast to discuss the new distribution agreement on Monday, Dec. 12, at 3:30 p.m. (ET). The live webcast can be accessed at www.dreamworksanimation.com.