TWO YEARS AFTER Walter Parkes and Laurie MacDonald signed their "deal of deals," in which they were treated, and compensated, as DreamWorks' biggest in-house producers, the effect of that deal was being felt. Of the eight films that DreamWorks was releasing in 2002, the couple produced four (The Time Machine, The Ring, Catch Me If You Can, and Minority Report) and executive-produced two (Road to Perdition, The Tuxedo). Parkes and MacDonald also produced (and Spielberg executive-produced) the follow-up to Men in Black for Columbia Pictures, which was one of the summer's big-event movies.
Parkes and MacDonald now worked primarily out of their new home in Santa Monica, a stone's throw from the bluffs overlooking the Pacific. As befitting the couple, the manse was decorated by L.A. designer Michael Smith (future decorator to the First Couple, the Obamas; his Hollywood clients included Dustin Hoffman and Rupert Murdoch) according to the comfy-classy aesthetic of the Spielberg residence, another Smith commission.
"The house literally rendered me speechless. It was beautiful," said one visitor who has seen many a Hollywood spread. Yet again, when it came to style and effortless class, Parkes and MacDonald had it over the rest of the town in spades.
For executives at DreamWorks, Parkes and MacDonald's new arrangement meant spending a lot more time in the car, for the couple now took all of their meetings at their home. Some executives were making the hourlong commute from Studio City to Santa Monica three to four times a week. "The option was, you could miss the meeting or go drive out," said one former executive, who said that an added frustration was that Parkes and MacDonald frequently canceled or rescheduled appointments at the last minute, while people were en route.
Parkes and MacDonald told friends, and even people at DreamWorks, that they desperately wanted to step down and focus only on producing. "I think Walter and Laurie were split," said one source. "They truly wanted someone to take over for them, and they truly didn't want someone to take over." Michael De Luca couldn't quite step in. As directed, he was busy making lower-budget genre pictures of the sort favored by New Line, where there was not such deep pride in the Brand. DreamWorks didn't seem to entirely trust its newest employee, an outsider who had his own quirky style. De Luca didn't like carrying a cell phone and so couldn't always be reached. He feared flying and so was loath to take airplanes. Within months of his being hired, De Luca discovered that DreamWorks had reached out to Nick Stevens, a comedy agent at UTA, who represented Jim Carrey, Ben Stiller, and Jack Black, to talk to him about joining De Luca in a partnership role at DreamWorks. The talks never went anywhere, but De Luca was not pleased.
The impossibility of a Parkes—De Luca partnership, given their radically different sensibilities, came into full view when De Luca showed interest in making a comedy written by Will Ferrell and his Saturday Night Live writing collaborator, Adam McKay—Anchorman: The Legend of Ron Burgundy, about a politically incorrect 1970s-era newscaster—which Judd Apatow was producing. To sell Parkes, De Luca set up a pitch meeting at DreamWorks with the filmmakers and Ferrell. The tall, goofy comedian, then unknown outside his SNL work, showed up wearing an enormous blue cowboy hat. He was Will Ferrell being Will Ferrell. But Parkes was not amused. When the meeting was over, he told executives that Ferrell was not a movie star. DreamWorks passed.
In a way, the summer of 2002 was a replay of the summer of 1997, when The Lost World and the first Men in Black were released—i.e., when DreamWorks players were doing very well by non-DreamWorks movies. When Men in Black II came out over the Fourth of July weekend, it went on to rack up $140 million domestically and $441 million worldwide. Spielberg's deal was greatly diminished from the first film, though he still received 7.5 percent of first-dollar grosses in exchange for essentially lending his name. MIB II was one of the most alarming examples of how big blockbusters increasingly seemed to serve stars more than studios—in order to get Will Smith and Tommy Lee Jones to return for a sequel, Sony gave each actor a $20 million payday in addition to huge gross points.
Minority Report was Spielberg's latest attempt to ambitiously stretch beyond the traditional blockbuster confines. The film, he said, was his first foray into film noir. Variety's Peter Bart noted that with all its heady discussions about self-determination and predestination (interspersed with scenes of Tom Cruise sprinting like Carl Lewis), it made Blade Runner (another dreary, psycho-techie homage based on a Philip K. Dick story) play like The Sound of Music. Roger Ebert, and other critics, gave Spielberg more props, calling the film "an awesomely virtuoso futurist thriller." Box office—$132 million domestically (and $358 million worldwide)—was not so awesome when you factored in the film's $102 million budget and Spielberg's and Cruise's sizable gross deals. Spielberg and Cruise took home an estimated $70 million or more, while Fox and DreamWorks wound up with about $20 million each, at best.
DreamWorks' other big, and very costly, summer movie, Road to Perdition, another Fox coproduction, also opened to respectfully mixed reviews, and grossed $104 million. Sam Mendes's second film was no American Beauty. DreamWorks might be making the kind of films that made the company proud, but profitability was still a vexing issue.
Another blockbuster that summer came in the form of an article by Bryan Burrough in the August issue of Vanity Fair. In the article, Michael Ovitz attributed his Hollywood demise to a "Gay Mafia" led by David Geffen. More than a decade after Geffen had vowed to his friend Howard Rosenman that he would "destroy" Ovitz—"watch me"—Ovitz was very much destroyed. Or, as Burrough wrote, "Michael Ovitz is ruined." After plowing more than $150 million of his personal fortune into what was to be his own dream company and a rival to CAA—the Artists Management Group—he was forced to sell the company for a piddling $12 million. His reputation as the Most Powerful Man in Hollywood had long since been replaced by Hollywood's Most Hated. And Geffen and his ilk were largely responsible, Ovitz believed.
The most telling sign of just how depleted Ovitz was, was his decision to speak so candidly to Burrough. The man who had wrapped himself in myth, who had built his reputation on his image—the perception of who Michael Ovitz was—had come out from behind the curtain. Never had he appeared so mortal. Geffen, who was of course quoted in the story, reacted with his own characteristic candor.
"Oh, please. A Gay Mafia?" he said. "This is so crazy. This is insane. I think he needs a psychiatrist. It's so paranoid, and so crazy, and so irresponsible, and makes him look like such a nut. It's beyond crazy. On a scale of 1 to 10 crazy, it's 11 ... He's made a fool of himself, and he's made a huge failure of his life. To say you've been brought down by the Gay Mafia and its allies is as crazy as anything I've ever heard in my life."
Geffen didn't stop there. He called Burrough a minute after the interview. "Did I mention his extraordinary homophobia?"
And with that, the crown was officially passed. For those who had watched the uneasy dance between Geffen and Ovitz over the years, who always knew one had to be toppled, that the throne would not sustain two kings—and especially not those two—the duel was over. It was a far less dramatic finale than the chorus would have hoped for, although Ovitz's on-the-record reference to a "gay mafia" was not bad copy. The press, naturally, went crazy, and Ovitz was called out of the shadows to make a public apology when he realized just how much worse he'd made the situation. Meanwhile, the question rising in everyone's minds was: Who would be next? Geffen would need a formidable foe. It's what kept life interesting. It would only be a matter of time, everyone seemed to know.
Ironically, the year's most profitable film that year was its least assuming candidate for that honor. The Ring, after grossing an underwhelming $15 million its first weekend (causing more criticism of marketing), based on strong word of mouth, the following weekend, with an added 500 screens, grossed $18 million, an unusual turn of events. It would ultimately make $129 million domestically and $249 million worldwide. DreamWorks not only had a surprise hit, it had its first live-action franchise. Plans for The Ring 2 were quickly set in motion. Unlike so many other of the studio's films, there were no major stars taking a chunk out of profits, and the budget had been kept to a modest $48 million.
When the Oscar race heated up, Miramax squarely boxed DreamWorks out of the picture for the first time since 1998. There would be no mudslinging between the two camps this year. The only contretemps had been a skirmish over the release dates for Miramax's Gangs of New York and DreamWorks' Catch Me If You Can. When Weinstein plunked down Gangs of New York on December 25, the day Catch Me If You Can was to open, Katzenberg went into a rage. Ultimately, Weinstein blinked and moved his movie to an earlier date in December.
This year was Miramax's most triumphant to date. When the Oscar nominations were announced in February of 2003, Miramax—exerting even more campaign muscle than usual, particularly on behalf of Gangs of New York (Harvey had publicly promised he'd win an Oscar for director Martin Scorsese)—racked up forty. Nominees included Chicago, based on the Bob Fosse musical; The Hours, an adaptation of Michael Cunningham's novel, starring Nicole Kidman as Virginia Woolf (a coproduction with Paramount); and Frida, starring Salma Hayek as the Mexican artist Frida Kahlo. The press, which had called Miramax down for the count the previous year, when the studio was trounced at the Academy Awards, was eating its words.
DreamWorks' showing paled considerably in comparison. Both Road to Perdition and Catch Me If You Can were excluded from all the major categories. Road received six nominations for art direction, original score, cinematography, sound, sound editing, and supporting actor (Paul Newman), and Catch Me If You Can nabbed just two, for music and supporting actor (Christopher Walken). Spielberg and Hanks were noticeably snubbed.
When the actual awards ceremony rolled around, Gangs failed to win even one Oscar. Instead, it was Chicago that ruled, winning Best Picture and five other statuettes, and reconfirming Hollywood's faith in movie musicals, a genre that hadn't been considered viable in decades until the ascendance of Moulin Rouge! the year before. Frida also took home two Oscars, and Kidman won Best Actress for The Hours.
This time, Terry Press couldn't cry foul play. DreamWorks had, for the first time in years, simply been shut out. Fittingly, there was no DreamWorks Oscar party, whereas Miramax had two—in addition to its traditional Oscar Eve party at the Mondrian, it held a bash for six hundred people the night of the Oscars at the St. Regis Hotel.
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The weekend was not revelry-free, however. That year Katzenberg instituted the Night Before party, held at the Beverly Hills Hotel—a no-press event that raised money for the Motion Picture and Television Fund's retirement home for elderly members of the entertainment industry. For years Lew Wasserman had been the organization's biggest fundraiser and spokesman, and sometime before, he had recruited Katzenberg to reach out to younger members of the industry. He seemed to know the end was near, and he wanted to pick his own successor, seeing in Katzenberg the drive and passion of a leader. In June, when Wasserman passed away at the age of eighty-nine, Katzenberg inherited his role as the fund's leading light.
Wasserman's passing was akin to a national holiday in Hollywood. His memorial service, held in the Universal Amphitheater, drew more than three thousand attendees, who came to mourn the death of the man who was considered by all to be the last of the Old Hollywood moguls. President Clinton spoke, saying of Wasserman, "He helped me become president. He helped me stay president. He helped me become a better president." Spielberg called Wasserman "a living time machine to that golden era."
Nearly a decade had passed since Spielberg, Geffen, and Katzenberg made their pilgrimage to Wasserman's home to ask for his blessing to build a new studio. To move forward on their own and, fueled by models and dreams of the past, forge a new future in Hollywood. So much—Hollywood itself—had changed since that fateful day. So much had been learned. Would they have done it all the same way, knowing what they knew now?
Sinbad: Legend of the Seven Seas, due out in July of 2003, was Jeffrey Katzenberg's most extreme experiment yet. He called the film "our attempt to do an homage to Steven Spielberg. It is meant to be Indiana Jones in animation." The traditionally animated project—which followed the adventures of the seafaring mischief-maker from the Arabian Nights tales, had no musical numbers and no animals that talked. Sinbad's sidekick, a dog named Spike, did nothing more than drool a bit. As for Sinbad, he was no imaginatively shaped Shrek—he was all chiseled jaw-line and perfect pecs, much like the man who provided his voice: Brad Pitt.
However, in the months leading up to Sinbad's release, even Katzenberg was having doubts about his once fervent philosophy that animated films should, in effect, be live-action films, only drawn. He was also feeling nervous about his still-not-total commitment to CGI. With the astronomical success of Shrek, not to mention that of Pixar (which was about to launch another CGI sensation into the marketplace: Finding Nemo), clinging to 2-D was feeling more and more like a losing proposition, and not just at DreamWorks. In November of 2002, Disney's traditionally animated Treasure Planet bombed so extravagantly that Katzenberg's former kingdom announced an estimated $74 million pretax write-off on the movie. Disney animation head Thomas Schumacher stepped down and hundreds of artists were laid off.
Starting to panic, Katzenberg began reversing course on Sinbad, trying to push it in a more fanciful, less "adult period piece," as he'd called it earlier, direction. "All of a sudden Jeffrey decided to change the art direction [on Sinbad] and make it more cartoony," said artist Paul Lasaine. "So it was way back to square one on a lot of things, even though you had a whole team of artists that were already rolling."
But even with these changes, in the wake of Shrek, Sinbad, which had been put into production four years earlier, felt like a throwback. When opening box-office grosses came in, they weren't just bad, they were comical. Over five days, Sinbad made just $6 million (half as much as El Dorado had made over half as many days). One DreamWorks executive recalled being incredulous, certain that the number must be from the first afternoon.
"It was a complete and total rejection of the marketplace," this source said.
The magnitude of DreamWorks' stumble was underscored by Pixar, whose Finding Nemo, a snappy underwater film about a lost clown-fish whose father (voiced by Albert Brooks) searches for him with the help of fish friend Dory (Ellen DeGeneres), went on to become the highest-grossing animated film to date. Released just a few days before Sinbad, on May 30, it grossed $339 million domestically and $864 million worldwide.
Katzenberg may have had a hunch that Sinbad was doomed, but he wasn't prepared for just how doomed—the movie would lose $125 million. Initially he pointed his finger at marketing, telling Press and her staff: "We all have a piece of ownership in this movie. Own up to what was your mistake."
Ultimately, however, not even Katzenberg could deny that Sinbad's problems went beyond its ad campaign. Speaking at a Monday-morning staff meeting, he said, "We made a weak movie. Marketing didn't sell it, but we didn't make a strong product. Everyone has a cross to bear. There is failure to share." Executives were grateful that he was acknowledging his own hand in the disaster—something they felt he hadn't done when El Dorado bombed. Something else that was different about Katzenberg's reaction this time around: he wasn't getting over it, at least not as quickly as he had after previous disappointments. When Prince of Egypt let him down, Katzenberg had simply forged on, asking: "What's next?" But in the days and weeks after Sinbad—which went on to gross an abysmal $26 million at the box office—Katzenberg stewed. He even stopped speaking to Press for several weeks.
"Sinbad was a low point," said one former employee. "Jeffrey didn't recover ... He used to dance on tables and get so excited. He lost a lot of enthusiasm. There was a lack of levity."
Sinbad was a wake-up call in other ways, too. Katzenberg's love affair with 2-D animation was officially over. Katzenberg said goodbye to the medium that had made him.
Some say there was Katzenberg before Sinbad and there was Katzenberg after Sinbad. The same could be said of DreamWorks. If El Dorado had rocked the company, Sinbad came close to capsizing it, and in its aftermath, DreamWorks was nearly bankrupt. The animation studio would hemorrhage $189 million in 2003 (compared to the $115 million lost in 2000, the El Dorado year). According to the business model Geffen had established for DreamWorks, $300 million needed to always be on hand in order to keep DreamWorks liquid. In 2003 that $300 million was not available. Paul Allen was called on for another infusion. He gave it, but not as freely as in the past; this time, in exchange for a $300 million commitment, he demanded more ownership in DreamWorks, bringing his stake up to 24 percent (initially, he owned 18 percent of the company). Thus, even if his money wasn't drawn upon, he would increase his overall return in DreamWorks.
Sinbad was like an enormous domino that crashed down, setting other pieces in motion and sending out reverberations throughout DreamWorks. In the fall, the company's last nonfilm division was cut loose—DreamWorks Records was sold to Universal for $100 million. The label had never managed to produce enough big, commercial acts to support itself—and its lavish spending wasn't working in an environment built around breaking acts fast and moving on to the next thing. Furthermore, without the ballast of a deep-pocketed corporate parent, the label couldn't withstand the changes that had swept over the music industry over the last several years, from the rise in on-line music and corporate-owned radio to the growth in the DVD and video-game market, which further hurt CD sales.
The sale of the label was pure Geffen, who had finagled the deal in tandem with General Electric's purchase of Universal studios from Vivendi earlier in the year. (Like the Bronfmans, the French found Hollywood as foreign as a Starbucks Frappuccino.) Because the new owners of Universal wanted a guarantee that what they were buying included the rights to distribute Steven Spielberg's movies overseas, and DreamWorks' animated movies all over the world, Universal and DreamWorks re-upped their distribution deal for another five years. As part of that agreement, Geffen slipped in an added clause—that Universal buy DreamWorks Records, even though GE was not buying Universal's music assets. (DreamWorks' Nashville division, which was having success thanks to country superstar Toby Keith, was not part of the deal.)
The end of DreamWorks Records was also the final chapter for Mo Ostin and Lenny Waronker, two of the most beloved music executives of the twentieth century, who had shaped not just the music, but the way making and selling music was conducted for decades in the music industry. Driven by love rather than profits, Ostin and Waronker put the music before all else, a practice that inspired a devoted following among both artists and executives.
The sale was also Geffen's swan song, and with it, the man who had nurtured Laura Nyro, Joni Mitchell, and Jackson Browne—and, even if he hadn't loved the music, championed Guns N' Roses and Nirvana—closed the door on the business that had made him one of the richest men in the world. And, in Hollywood, the most feared.
The sale cut one of Geffen's primary ties to DreamWorks, and some felt that without that link, he became an even more distant partner in the company. But one of Geffen's friends downplayed the significance of the break, saying that it had no effect on his role, seeing as "he left the music business in his mind long ago."
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Over at the live-action studio, no one felt the post-Sinbad crunch more than Mike De Luca, who was now, because of the financial situation, being even further reined in. When De Luca sent things to business affairs for approval, they were sent straight to Parkes. "I was told each and every deal had to go through Walter, despite what was in my contract," he would later tell the L.A. Times' Patrick Goldstein.
The blurry lines of power frustrated agents and producers, who complained that it wasn't clear who was in charge at DreamWorks, and therefore who should be approached with projects. But most of all it was frustrating to De Luca. Not only had he been stripped of the autonomy he'd enjoyed at New Line, he found himself at a studio where his creative sensibilities were increasingly at odds with those of the other major players. One by one, he had watched as projects he'd lobbied for—including Sideways, the latest film from Election writer-director Alexander Payne; 21 Grams, directed by Alejandro González Iñárritu (Amores Perros); and Roland Emmerich's global-warming tent pole, The Day after Tomorrow—went to other studios because he'd been unable to convince his superiors as to their worth. It wasn't just Parkes who lacked enthusiasm; in the case of Sideways—a project De Luca said he would "fall on my sword for"—Spielberg didn't think Paul Giamatti was a movie star.
If Parkes and MacDonald were cracking down, they had their reasons. Having tried to be more hands-off when De Luca first arrived, the films that the new head of production had pushed through—Head of State and Biker Boyz—were disasters. And worse than losing money, which they did, they threatened to tarnish the sacrosanct (and Spielberg-endorsed) DreamWorks brand.
The bottom line was that the films De Luca had been able to make didn't fit in at a company that hung its identity on Oscar-winning films such as American Beauty, Gladiator, and Saving Private Ryan. Tension between De Luca and Parkes was kept at a low boil, never exploding into screaming matches or slammed phones. This was, after all, DreamWorks. Those who raised their voices did so at their own peril. But nobody missed the two men's mutual disdain. "Walter seemed unimpressed" by De Luca, said one insider. "You could tell by the way he'd take a while to get back to him, not respond to material he pitched, and pass on projects. He was never mean or rude. Arrogant, maybe." Meanwhile, friends of De Luca's say that he was grumbling about Parkes, and feeling undermined. "At first he was disdainful of Walter and his style when Walter wasn't around. Then he was really sarcastic. Then he gave up," said one.
De Luca did not win any points for himself when he arranged a screening of New Line's spring break movie The Real Cancun in the Amblin screening room. During the scene in which a frat boy pours a cup of his urine on a bikini-clad babe who's been stung by a jellyfish, in walked Spielberg. He sheepishly turned around and walked right out.
De Luca's days at DreamWorks were not without bright spots, however. When Old School was released in February, it was an immediate hit, grossing $75 million, or three times what it had cost to produce. It went on to make another $143 million in DVD sales. Even before Old School was released, DreamWorks executives realized that the movie was a fun, risqué romp and that both Ferrell and Vaughn had turned in winning performances. Ferrell, in particular—even Parkes would admit—was the film's breakout star, and Old School sent him steadily en route to being one of Hollywood's most sought-after actors. Never again would he receive less than $1 million to star in a movie—within a year, he'd be making twenty times that.
That Ferrell was not just funny, but very funny, was nothing new to his managers, Jimmy Miller and Eric Gold, nor to Judd Apatow, who for years had been collaborating with Ferrell and a number of other funnymen, including Vaughn, Ben Stiller, Jack Black, Owen Wilson, and Adam McKay, who'd met years earlier in various comedy venues, such as SNL and The Ben Stiller Show. But studios had been slow to come around to the group's brand of post-ironic, at times juvenile, humor, and for years Apatow's feature projects had been turned down. But with Old School, the so-called frat pack was baptized into Hollywood. New Line fast-tracked its comedy Elf, starring Ferrell as an overgrown Santa's helper. And when it came out and grossed $173 million (on a budget of $33 million), Ferrell was officially the hottest comedy star in Hollywood. DreamWorks reversed its decision about Anchorman: The Legend of Ron Burgundy, the film that had inspired Parkes's slight against Ferrell. But it cost the studio—having sent the film into turnaround, DreamWorks now had to enter a bidding war to win back the movie, at a cost of $4 million.
De Luca grew increasingly tired of struggling for control—and respect. By the time House of Sand and Fog, a film that De Luca had set up at DreamWorks, was released in December, he was "receding into the woodwork," according to one director. By the end of the year, friends were saying that De Luca would likely be gone when his contract expired in June.
De Luca could not have been warmed by Spielberg's comment in an Esquire article by Kim Masters that said he was grateful for Parkes and MacDonald's work at the studio and "to some extent" that of De Luca. Though the most telling quote of all was when Spielberg called 2003—the biggest hit of which was Old School—"our first shitty year."
As DreamWorks weathered its most unstable period to date, one looming concern was that, in just two years, Paul Allen could begin cashing out his millions. To pay him back, DreamWorks was going to need money. Someone was going to have to come up with it.
In October of 2003, Bill Savoy was fired as Allen's investment chief. For more than a decade, Allen had put his trust in Savoy in pursuing an investment strategy that now seemed an extravagant disaster. Due to the crash of the tech market, and investments that were ill-timed and, in many cases, ill-advised, Allen's fortunes, which had once shot up to $30 billion, making him the second richest man in the world, had now tumbled down to $18 billion. Although the Microsoft cofounder could often seem indifferent to his losses when they stemmed from causes, or companies, that he was passionate about, Bert Kolde, Allen's college roommate at Washington State University and chief operating officer of Allen's home-entertainment company Digeo Inc., said that the ordeal was "a crucible" for his friend.
Allen himself admitted to BusinessWeek, "I've been through the fire in the last few years."
Replacing Savoy was a team of more than two dozen MBAs, many of them with Ivy League credentials. Allen also elevated his sister, Jody Patton—a far more cynical voice in regards to Allen's investments than Savoy had ever been—to CEO of Vulcan Inc. And he became more active in how and where his money was being spent.
Savoy hadn't been the primary reason Allen invested in DreamWorks, but he was a reason, and certainly a big reason that Allen had stayed in for so long. Savoy was as much a believer in the company, and as smitten by Geffen, as Allen was. Vulcan's new investment strategy was to cut losses and diversify, and, accordingly, Allen began dumping dozens of slumping investments and writing off many more. In a few months, his portfolio was down to just forty companies, from one hundred. DreamWorks was not excluded from the new scrutiny.
"My sense was that the old Vulcan management thought of [the DreamWorks] deal as a talent relations deal for Paul Allen to be friends with Steven Spielberg, and Steven Spielberg's friends, and David Geffen," said one former DreamWorks executive. "When [Allen] cleaned house ... the new people came in and said, basically, 'Paul, you don't need to have a billion-dollar investment in DreamWorks to be friends with Steven Spielberg.'"
Another insider involved with the financial dealings between DreamWorks and Allen said, "In the early years, we were always hearing 'Paul's great.' But in later years ... suddenly we were hearing about 'those Vulcan people' and how difficult they were being. There was a lot of stress amongst everyone, a lot of wear and tear. Paul was less great then."
"Those Vulcan people" were asking tough questions. In one meeting with DreamWorks executives, a Vulcan investment manager told Katzenberg that, having reviewed all of Vulcan's passive investments, DreamWorks was at the bottom of the list in terms of its return.
Everyone at DreamWorks was well aware that Allen could begin cashing out his investment in 2005. An initial public offering had always seemed like a likely solution. By 2003, spinning off the animation studio as a public company was already being discussed, timed to the release of Shrek 2 the following year. Even so, sources say that DreamWorks didn't expect Allen to actually call his option and demand out. When he did, it set in motion marathon phone sessions between Geffen and Katzenberg, who were now faced with the reality that an IPO wasn't just a wise precaution, it was being forced. Katzenberg responded to the news by saying to Geffen: "If he wants war, we'll fight!" according to a source with knowledge of the conversation. The situation had to be handled with kid gloves, and Geffen set about advising his partner as to how to proceed.