Steven Spielberg and his high-powered friends at DreamWorks may have found financing to leave the Paramount division of Viacom (NYSE:VIA). According to The Wall Street Journal, Reliance ADA of India "would provide Mr. Spielberg and company with $500 million to $600 million in equity."
About a year ago, Viacom management said that DreamWorks was not a "material" part of Viacom. From a financial standpoint that may or may not be true. But, there are not many stars in the movie business with the credentials of Mr. Spielberg, who has made some of the most successful movies in the history of film.
The potential departure from Viacom of some of its top talent is telling. Large media companies are now so significantly challenged by competition, especially from the internet, that the idea of keeping big names at a price may no longer have much appeal.
In the age of user-created content and sites like YouTube, who needs movie stars to get eyeballs? The audience for video is moving away from movies which cost $200 million to make.
Douglas A. McIntyre is an editor at 247wallst.com.