Katzenberg Aims to Be New Bon Ami

With his trademark lack of subtlety, DreamWorks partner Jeffrey Katzenberg is working overtime cozying up to Jean-Marie Messier, whose French company Vivendi is poised to take over Seagram Co. and Universal, its Hollywood studio.

Rumors are flying that Katzenberg and his two partners, David Geffen and Steven Spielberg, are trying to convince this unsuspecting mogul-in-the-making that he really needs to own some or all of Hollywood’s hot shop du jour.

At the very least, Katzenberg & Co. want Messier to pay handsomely for the right to continue distributing DreamWorks’ movies internationally and on home video. The company’s deal with Universal is up for renegotiation, and DreamWorks wants to exploit the fact that it’s experiencing a hot streak at the box office with such hits as “What Lies Beneath,” “Gladiator” and “Chicken Run.”

All eyes were on Katzenberg at Universal’s star-studded after-party Monday night following the premiere of Imagine Entertainment’s comedy sequel “Nutty Professor II: The Klumps.”

While most guests in the VIP section of the party at Universal Studio’s theme park were rushing up to congratulate the film’s stars, Eddie Murphy and Janet Jackson, and producer Brian Grazer, “Jeffrey made a direct bee-line for Messier,” observed one onlooker, noting that Katzenberg snatched the empty seat next to Messier at his table, and for at least half an hour at the height of the open-air party for 4,000 guests, dominated the Frenchman’s attention.

It struck many as inappropriate that Katzenberg was in effect playing “host” at a party that wasn’t even his.

“He parked himself down and attempted to monopolize the time of our new leader,” said a top Universal executive. “He was so solicitous, it was like he was the host,” said another.

If Universal folks watching Katzenberg seem paranoid, perhaps there is reason.

Katzenberg button-holed Messier at the recent Herb Allen Jr. media conference in Sun Valley, Idaho, supposedly going so far as to advise him on how to “fix” Universal.

A story widely making the rounds at Universal this week is that at Sun Valley, Katzenberg actually presented Messier with a list of which departments he thought were weak and which executives should be fired.

Whether this so-called list exists or is simply Hollywood’s latest urban legend, it’s not at all shocking that Katzenberg would be trying to position himself as Messier’s confidant.

Many Universal executives and others who have witnessed Katzenberg in action are convinced he is bucking to run the studio in the event he can convince Messier to someday buy DreamWorks.

Early last year, Katzenberg and Geffen failed in their aggressive bid to get Seagram Co. chief Edgar Bronfman Jr. to somehow merge his studio with DreamWorks.

The proposed deal, which Geffen repeatedly denied ever existed despite ample evidence to the contrary, finally unraveled when Bronfman called it off in the eleventh hour, deciding against ceding control to DreamWorks. Geffen, once a confidant of Bronfman’s, no longer considers the Seagram heir a pal.

But a source close to DreamWorks insists that Geffen and his partners now have no plans to sell their 6-year-old outfit to Universal or anyone else, especially when their company is enjoying a box-office blitz.

The source didn’t, however, dispute speculation that DreamWorks is trying to leverage its current success into extracting a pound of flesh from Universal’s new owner in negotiating an even richer deal than it already has.

Not only do the partners want to squeeze more out of Universal by negotiating an even lower distribution fee than they already have, which according to Universal executives is ridiculously favorable to DreamWorks at 8% sliding to 5%, they could very well try to hit Vivendi up for a capital infusion.

The DreamWorks partners might be arrogant, but they’re not dumb. They clearly know they’re sitting in the catbird seat now that DreamWorks is on a roll with its live-action movies. (Nevermind that their music company is a non-starter, despite its one hit by rock band Papa Roach, their TV division is a one-hit wonder with “Spin City” and their Glendale animation business is a cash drain.)

It’s no surprise DreamWorks is in overdrive to call attention to itself now.

In recent weeks, there has been a spate of glowing articles about DreamWorks’ current box-office bonanza and the fact that it’s aggressively out shopping for a new distribution deal with other studios including Warner Bros.

Most at Universal view DreamWorks’ threat to take their deal elsewhere as a blatant ploy to get Messier to act fast and pay big.

“They’re working as hard as they can to promote their success, and they’re trying hard to get the French to believe that AOL [the soon-to-be owner of Time Warner and its Warner Bros. studio] wants to buy them,” said one Universal executive.

Executives at the studio remain convinced that while Katzenberg’s schmooze-athon with Messier might in the short run be motivated by a desire to get him to strike a better distribution deal and perhaps make an investment in DreamWorks, he’s actually laying the groundwork for what he hopes will be his own exit strategy when and if Vivendi buys his company.

Katzenberg must think Messier is an easy target since he’s virtually an alien in Hollywood and since Vivendi-controlled French pay-TV giant Canal Plus, headed by Pierre Lescure, has a long history of spending pots of dumb money in Hollywood.

DreamWorks would like the world to think that its recent success has turned around the fortunes of the company.

But the numbers still don’t necessarily add up to a fat bottom line for a company that is still on the hook to its largest investor, Paul Allen, for $1 billion.

Several of DreamWorks’ hits, including “Saving Private Ryan,” “Gladiator” and “What Lies Beneath” are co-owned with other studios, cutting the pie in half. Add in that stars such as Tom Hanks and Harrison Ford command as much as 20% of the studio’s cut of gross revenue, and the profit quickly evaporates.

Low-budget movies “American Beauty” and “Road Trip” might be their biggest moneymakers.

Since DreamWorks is privately held, the company never has to actually detail profit and losses. But the fact remains that its overall business model--primarily a stand-alone premier production company--isn’t viable in today’s market controlled by multinational media conglomerates.

“They have the highest performing product in the industry right now,” said a source close to the company. But they need to be more to “capture added value . . . one way would be to get someone like Universal to invest more capital in them.”

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DreamWorks: All Dressed Up and Ready to Deal

DreamWorks is sweeping the box office this year, making the mini-studio, on the surface, a hot property. Still, profits remain elusive. After big stars and directors take their off-the-top share of revenues and the remaining pie is split with their studio partners, DreamWorks movies deliver little to the bottom line. Figures are U.S. box office receipts.

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Gladiator*: $179 million

American Beauty: $130 million

Chicken Run*: $86 million

What Lies Beneath**: $30 million

Road Trip*: $67 million

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*Still in theaters

**Just released