Walt Disney Studios and DreamWorks Studios altered their long-standing distribution deal this week, which previously allowed Disney to distribute and market DreamWorks’ films both domestically and in countries all over the world. This week, DreamWorks replaced Disney with a new foreign distributor, Mister Smith Entertainment.
The new change comes as a result of DreamWorks’ financial resources being significantly decreased following several recent high-profile flops, including Cowboys & Aliens and I Am Number Four. Previously, DreamWorks fully financed their films and then received their foreign box office receipts, minus a fee paid to Disney. However, the new agreement requires Mister Smith to pre-sell foreign distribution rights for upcoming DreamWorks projects to local distributors in each country, which gives DreamWorks more money for production by getting a guaranteed amount of money up front.
Under the new deal, Walt Disney Studios will still handle distribution in the U.S., Canada, Latin America, Australia, and most of Asia, while Mister Smith Entertainment will control sales in Europe, Africa, and the Middle East.