Case Study Essay

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Steven Spielberg’s Consulting Deal with Universal Studios
Steven Spielberg has been in the entertainment industry since 1957 with his classic western “Wagon Train,” which gave him notoriety as an uncredited assistant editor (IMDB.com, 2012). Steven Spielberg is a very talented man who has been in the entertainment industry for many years. Steven Spielberg is a well-known director, producer and writer in Hollywood today. Spielberg has countless big grossing, critically acclaimed credits to his name, as producer, director and writer. Spielberg has won many awards for his movies over the years; he is also one of the wealthiest filmmakers in the world (Imdb.com, 2012). Steven Spielberg began consulting with Universal Studios on January 20, 1987 (Finke, 2012). He consulted on a dozen attractions at theme parks in Orlando, Fl. and Japan. Some of those attractions includes E.T. Adventure, Men In Black Alien Attack, Jurassic Park River Adventure, and Back To The Future: The Ride (Finke, 2012).
Steven Spielberg initially signed a contract with Universal Studios over 20 years ago when the theme park first opened. In the initial deal Spielberg had with Universal Studios was set to end in June 2010 and Universal would have been forced to pay out. The pay out would have been hundreds of millions to Steven Spielberg for his help in designing of Universal Studios parks and rides (Graser, 2011). In the deal Spielberg initially received 2% of all gross revenue generated by Universal Studios two theme parks in Florida and one in Japan (Barnes, 2012). If the deal was terminated the annual payments would have ended and Spielberg would have received.
Steven Spielberg interest was to get the buyout from his contract and end his deal with Universal Studios in 2010 (Finke, 2012). The interest of Universal Studios was to find a way not to make the payout and instead find a way to keep Spielberg. Universal Studios interest was to extend Spielberg’s contract to keep from paying him a huge bulk of money all at one time.
Universal Studios position was to get Steven Spielberg to delay his “put” deal which is the right to have the studio buy him out of the theme parks deal in a year (Finke, 2012). Spielberg’s position was not to delay the buyout, he wanted his money and he wanted to walk away from the parks. In my opinion he was ready to walk away from Universal Studios but the company could not afford for him to do so. Spielberg walking away would make the company suffer financially in the end.
During the negotiation with Universal Studios and Steven Spielberg many things went well. One thing that made the negotiations go smoothly was the fact that both parties were familiar with each other. By having a good relationship before the negotiation process kept down conflict. Another thing that went well was the fact that Steven Spielberg signed a deal which extended his contract and postponed the payout. Universal Studios was able to move forward in refinancing about $1billion in debt by getting matters with Spielberg squared away (Barnes, 2012). If Steven Spielberg would have walked away from the deal with Universal Studios, he could have probably inked a distribution deal with Disney (Graser, 2011).
During the negotiation process I did not see too much that went wrong, but there were a few areas of concern for Universal Studios. Although the negotiation process did not last long for Universal Studios it was feeling like forever. Spielberg was not rushing to give Universal Studios a response to their questions. He made Universal wait until he came off vacation to continue the negotiation process. In the beginning both parties did not agree on what was best. The deal was a win-win between Mr. Spielberg and Universal Studios because Universal got to keep Steven Spielberg as a consultant until 2017, and Steven percentage went up from 2% to 5.25% of all gross revenue generated by the two theme parks in Orlando, Fl. and the one in Japan. (Kapko, 2009)
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