Paramount Pictures has agreed to buy DreamWorks in a $1.6 billion cash and debt deal.
Viacom will pay about $774 million in cash, and the rest of the $1.6 billion purchase price is assumption of debt.
Paramount and its media conglomerate parent sealed the deal in about a week, snatching privately held DreamWorks from General Electric Co's NBC Universal, which had been in on-again, off-again talks for most of a year, executives said.
The deal gives the Viacom-owned studio a much needed boost and ends the efforts of Steven Spielberg and two other moguls to build an independent movie and television empire.
Viacom plans to sell DreamWorks' 59-title library, which includes Oscar winner American Beauty, for $850 million to $1 billion in the next couple of weeks, leaving net purchase price of $500 million to $650 million, Viacom executives said in a conference call.
Steven Spielberg, director of movies like Schindler's Listand Saving Private Ryan, will stay on at DreamWorks as producer-director and studio co-founder David Geffen will remain as chairman.
The two are responsible for producing four to six live action films a year for Paramount, boosting that studio's total output to 14 to 16 pictures in 2006.
The deal "will dramatically accelerate the turnaround of Paramount," said Viacom co-chief operating officer and co-president Tom Freston.