Disney, DreamWorks Strike Deal

According to an Associated Press report, Disney has reached a new agreement, Monday, with DreamWorks SKG. Walt Disney Studios, based in Burbank, will handle distribution and marketing for six live-action films per year, under its Touchstone Pictures brand, beginning in 2010.

The deal came after Universal Studios rejected a demand from DreamWorks for $250 million in upfront film financing. The stipulation came from co-founder Steven Spielberg and Chief Executive Stacey Snider. Universal, a division of General Electric, has been cutting costs across the board.

It also follows a difficult quarter for Disney's studio, which experienced a 64 percent drop in operating profits. Disney also recently declined the option to co-finance future "Narnia" movies with Walden Media, after the second installment in the big-budget series, The Chronicles of Narnia: Prince Caspian, failed to live up to expectations.

David Miller, an analyst with Caris & Co., said Disney will look to Spielberg to bring a home run to the studio and possibly bolster its theme park and consumer products businesses. "They're getting more bat at the plate for less risk," Miller said. "The studio's goal is to create franchises that lift up the other segments of the company."

DreamWorks' films will be co-financed with Reliance Big Entertainment of India, its partner since October, when DreamWorks left Viacom Inc.'s Paramount Pictures. The rapidly deteriorating credit markets have complicated that split, however, which led the company to seek better terms from its distribution partner. Reliance said it would match loans made by JPMorgan Chase & Co., totaling $550 million, to finance new movies over the next seven years. But JPMorgan's fund-raising has been delayed and the bank now plans to raise $325 million by the end of next month.

DreamWorks and Universal announced a distribution deal in October, but with DreamWorks asking for more upfront financing and other new terms, talks fell apart.