Spielberg empire sold to rival

The film company founded by Steven Spielberg and responsible for such hits as Saving Private Ryan and American Beauty was today sold for over £900 million.

DreamWorks SKG had amassed debts of £471 million despite the success of the recent Wallace And Gromit movie and others, and owner General Electric was forced to sell to get rid of the deficit.

Oscar-winning director Spielberg had hoped to buy the company in partnership with two other Hollywood moguls but was today beaten to the sale by rival film firm Paramount Pictures and its parent company Viacom.

Despite losing out, Spielberg, director of Schindler's List and ET, will stay on at DreamWorks as producer-director and studio cofounder David Geffen will remain as chairman.

The two will be responsible for producing four to six live action films a year for Paramount, boosting that studio's total output to 14 to 16 pictures next year.

The agreement comes after months of on-again, off-again negotiations with Paramount, as well as NBC Universal.

Viacom now plans to sell off DreamWorks' 59-title library, which includes the new film Memoirs Of A Geisha, which opens in Britain next month, Chicken Run and Cast Away, for between £480 million and £570 million to wipe out the debts and give the company a fresh start.

The sale marks the end of the independent DreamWorks which was founded 11 years ago by Jeffrey Katzenberg, Spielberg and Geffen.

They wanted to make films, TV shows, video games and new digital products that would rival Hollywood's grand old studios.

But the high cost of production and lack of major profits forced them to sell off the video game business and partner TV operations with broadcaster NBC. They had been in negotiations with media giant NBC Universal but talks had stalled, leaving the deal open to Viacom which sealed the sale within a week.