• by Wayne Friedman , December 12, 2005

The ink isn't even dry on its split-up from CBS, but the "new Viacom" has already made its first major acquisition, nabbing the coveted live-action unit of Steven Spielberg's DreamWorks SKG studio in a deal valued at $1.6 billion. The move signals that the new company, which includes Paramount and MTV Networks, plans to remain a major Hollywood player after it splits with Viacom's CBS and Infinity Broadcasting units into two separately traded public companies later this month.

The deal also adds scale to the new Viacom's production and distribution efforts at a time when Hollywood has been consolidating, and when units like MTV and Nickelodeon have been stepping up their presence in the movie business.

"The idea is to complement the big budget live action films from DreamWorks with lower budget, more targeted films in the rest of its slate," commented Merrill Lynch analyst Jessica Reif Cohen in an analysis of the deal sent to investors Monday morning. "These films will likely focus on extending core New Viacom brands such as MTV and Nickelodeon."

General Electric's NBC Universal had been pursuing a deal to acquire DreamWorks, but those negotiations have been on and off since DreamWorks changed its financial details.