DreamWorks and Disney Agree to a Distribution Deal

LOS ANGELES — Touchstone Pictures, a film label that the Walt Disney Company had all but abandoned, is coming back to life as the new distribution pipeline for Steven Spielberg’s production company.

As expected, Walt Disney Studios and DreamWorks Studios, the latest incarnation of Mr. Spielberg’s boutique filmmaking operation, said Monday that they had reached a distribution agreement after a collapse in talks between Mr. Spielberg and Universal Pictures, with whom DreamWorks had announced a new distribution deal just four months ago.

Under the new agreement, Disney, via its Touchstone imprint, will distribute 30 DreamWorks films over five years. Disney will also handle DVD sales and distribution on Starz, the premium cable channel with which Disney has a long-term deal.

More unexpected were some of the details of the arrangement. DreamWorks, for instance, will pay Disney a fee of 10 percent of revenue. The percentage is more onerous than the company had expected at Universal. Disney will also lend DreamWorks a little more than $100 million, said people with knowledge of the deal who were not authorized to speak publicly.

The news late last week that DreamWorks was parting from Universal so soon after striking that deal jolted the movie industry, becoming the latest sign that the climate for raising money in Hollywood is extremely difficult, even for someone named Spielberg.

“This is an opportunity to improve our profitability by wisely using some extra capacity in our system,” Robert A. Iger, Disney’s chief executive, said on Monday. “DreamWorks has a great creative and commercial track record.”

Stacey Snider, the chief executive of DreamWorks, said on Monday, referring to Disney, “We’re not just in the place we need to be, we’re in the best place we could be.”

The extra capacity Mr. Iger mentioned involves Touchstone, which was founded in 1984 as a way for Disney to expand beyond the family market and make movies for adults. Touchstone released the company’s first R-rated picture, “Down and Out in Beverly Hills,” and scored several megahits, including “Pretty Woman.”

But in 2006, Disney significantly scaled back its investment in Touchstone as moviemaking costs soared industrywide, deciding instead to focus on family pictures stamped with the Walt Disney logo. As a result, Touchstone has released two to three pictures a year, compared with six or seven in earlier years.

In 2008, Touchstone released “Miracle at St. Anna” and “Swing Vote,” both box office disasters with combined worldwide sales of $36.6 million and combined production budgets of $66 million, excluding marketing. While Disney’s bets on the movies did not pay off, they did not hurt the studio much either, because Spike Lee and Kevin Costner, respectively, shouldered part of the production costs. DreamWorks had a hot streak at the box office when it was owned by Paramount, with hits that included “Norbit” and “Tropic Thunder.” But several recent films, including “Revolutionary Road,” “The Ruins,” “Ghost Town” and “The Uninvited” have underperformed, posing a challenge.

Ms. Snider said the DreamWorks slate stood a reasonable chance of turning a profit for all involved. “When you’ve got that kind of volume, you’re looking at actuarial results, not picture-by-picture performance,” she said.

Touchstone will not release a DreamWorks film until late next year. No titles have been announced, but the pictures Mr. Spielberg and Ms. Snider are working on most aggressively include a comedy starring Steve Carell called “Dinner With Schmucks” and “Motorcade,” a Secret Service drama. DreamWorks is also developing a series of movies around “The 39 Clues” series of children’s fantasy adventure books.

The agreement between Disney and DreamWorks was reached after a planned distribution deal between DreamWorks and Universal Pictures fell apart last week. Underscoring the squishy nature of Hollywood dealmaking, a partnership between DreamWorks and Universal was formally announced in October. “This agreement starts a new chapter,” said Mr. Spielberg at the time. But no paperwork was ever signed, say the people with knowledge of the Disney deal.

The economic slowdown has made it difficult for DreamWorks to raise the necessary money for film production to supplement its $500 million or so in backing from Reliance Big Entertainment of India. In recent weeks, talks between Universal and DreamWorks grew increasingly bitter, with DreamWorks asking Universal to change its original terms and Universal asking Mr. Spielberg to change the terms of a long-standing consultant contract he holds with the Universal theme parks.

Universal executives then became furious that Mr. Spielberg’s representatives approached Disney without alerting them. In a cranky public statement on Friday, Universal said it was walking away from DreamWorks.