DreamWorks Secures $1.6 Billion in Financing

Strategic Insights -

DreamWorks, the fledgling movie studio founded by Steven Spielberg, Jeffrey Katzenberg, and David Geffen, has secured $1.6 billion in financing from Chemical Bank and other sources. The investment will help the studio cover its start-up costs, including studio facilities for film and TV production, a record label, and a division for video games and other interactive entertainment products. The studio is expected to raise an additional $300 million from investors to meet its goal of having $2 billion at its disposal.

Key Takeaways:

  • DreamWorks has secured $1.6 billion in financing from Chemical Bank and other sources, including $500 million from Paul Allen and $100 million from IBM, Microsoft, and Capital Cities/ABC.
  • The studio's founders, Spielberg, Katzenberg, and Geffen, have also put up a total of $100 million of their own money.
  • DreamWorks plans to use the financing to cover start-up costs, including studio facilities for film and TV production, a record label, and a division for video games and other interactive entertainment products.
  • The studio is expected to raise an additional $300 million from investors to meet its goal of having $2 billion at its disposal.
  • DreamWorks is expected to generate billions of dollars for California's economy and could replace lost aerospace work with high-tech entertainment projects.
  • The studio's business plan predicts that it will see its first profits by the year 2003, based on a plan to release 24 feature films by the end of the decade.
  • DreamWorks has partnered with UCLA's Business Forecasting Project to study the economic impact of its operations, which estimates that the company will generate $700 million in tax revenue for the state and employ 14,300 people with an average annual salary of $100,000 by the year 2004.
  • The study also projects $10.3 billion in ripple effects of DreamWorks-generated income over the next 10 years, which could help create 67,700 new jobs in California alone.

Statistics:

  • $1.6 billion: The amount of financing secured by DreamWorks from Chemical Bank and other sources.
  • $500 million: The amount of financing provided by Paul Allen.
  • $100 million: The amount of financing provided by IBM, Microsoft, and Capital Cities/ABC.
  • $100 million: The amount of their own money contributed by DreamWorks' founders (Spielberg, Katzenberg, and Geffen).
  • $2 billion: The goal of financing that DreamWorks aims to achieve.
  • $700 million: The estimated tax revenue that DreamWorks will generate for the state by the year 2004.
  • 14,300: The estimated number of people that DreamWorks will employ by the year 2004.
  • $100,000: The average annual salary of DreamWorks employees.
  • $10.3 billion: The estimated ripple effects of DreamWorks-generated income over the next 10 years.
  • 67,700: The estimated number of new jobs that could be created in California alone due to DreamWorks-generated income.

Sources:

  • The Hollywood Reporter
  • UCLA Business Forecasting Project study conducted by economist Larry Kimbell
  • DreamWorks 10-year business plan
  • UCLA Business Forecasting Project report on the economic impact of DreamWorks operations