Well, this is actually very interesting, because it shows that even Spielberg's name cannot overcome the bad economy. Believe me, if things weren't as bad as they are, then Universal probably would have given in to any changes which DreamWorks desired. If you read through the Reporter piece, you'll see that the catalyst for the troubles had to do, in part, with Time Warner's (NYSE: TWX) HBO channel. HBO and DreamWorks couldn't come to an output deal, thus eliminating a potential financial hedge for DreamWorks.

Unfortunately for Spielberg, GE just isn't a company to fool with these days. Have you checked GE's latest stock quote? I really don't want to, because I am a shareholder of the industrial conglomerate with a cost basis that is much, much higher than current prices, but I'll be a team player and do so anyway. On Friday, GE closed at $11.10, not far from its 52-week low of $10.66. The 52-week high is over $38. GE has a lot of financial exposure as we all know, so the credit crunch and bad-bank scenario has not been kind. In fact, there's a lot of speculation that GE may have to eventually cut its dividend (at this point, I think we may indeed see a lower GE dividend, which really is saying something, considering the kind of iconic dividend payer GE has been over the years).

There's no question that execs at GE are telling all their divisions not to throw money around aimlessly or make deals that are not economically favorable and conducive toward long-term maximization of shareholder value. And, movie slates are notoriously tough assets in terms of generating high returns on capital. I'll tell you, even if times were booming, I think studios should be wary of making any sort of deal with high-priced talent.

Now, there's another part of the DreamWorks saga that has me completely baffled. It's said that DreamWorks is negotiating with Disney (NYSE: DIS). The Reporter article even offered positive opinion on that element, stating that Disney's decision to reduce its annual film output actually allows the Mouse some leverage to add more movies to its pipeline. This is wrong on so many levels! To begin with, Disney made a conscious decision to concentrate on Disney-branded films such as Pirates of the Caribbean. CEO Bob Iger has said that family-friendly flicks with the Disney logo attached increase returns on capital. Why, then, would Disney want to fool with taking care of a pipeline from another studio? In fact, that bit in the article near the end about overhead at Disney being underutilized due to the reduction in movie production just doesn't justify a deal with DreamWorks in my opinion. Disney should just simply cut its overhead and work more efficiently.

Without a doubt, Disney does not want to be distracted by DreamWorks. It is having a ton of problems dealing with the recession. Plus, I'd have to imagine that working with Spielberg isn't going to be a walk in the park. He reportedly didn't have a great time at Viacom. And considering that Universal has decided that the DreamWorks model wouldn't work for its shareholders, why would Disney and Spielberg get along? Remember that there's a lot of happy history between the famous director and Universal. Believe me, I was truly floored when I read the headline about the failure of the transaction. Since Disney has a reputation for being a tough negotiator in Hollywood, I just can't see any fundamental logic going on.

So, Universal corrects itself by backing out of a deal that I would agree wasn't ultimately beneficial to its studio system, and Disney looks like it could be making a mistake. I love Spielberg, but I've always said that it would be better for the shareholders of public media companies if the boards of those companies would insist on cutting movie-production costs by engaging new talent (i.e., cheaper, less demanding talent). I'm sure Spielberg and the rest of the DreamWorks talent pool can deliver an exciting slate, but that won't mean that it will be full of hits. Disney is simply exposing itself to more risk in my opinion, even if it is only taking a distribution fee for the most part (we won't know all the details till the deal is done). Disney should just stick to its guns and focus on its own projects, but it looks like a Disney-DreamWorks pairing could soon be a reality. This GE shareholder was happy at first, until he realized that he was a Disney shareholder as well.

Disclosure: I own Disney, GE; positions can change without notice; and, for the record, I think Steven Spielberg is a genius.