Paul Allen Gives Dreamworks A Boost

HOLLYWOOD - The $500 million investment by high-tech billionaire Paul Allen in the new studio being formed by entertainment moguls Steven Spielberg, Jeffrey Katzenberg and David Geffen is an important financial vote of confidence in the fledgling venture - Hollywood's biggest and most highly anticipated start-up ever.

Allen disclosed yesterday that he was giving the studio, DreamWorks SKG, its single biggest investment.

It instantly makes the company a leading player in the evolving multimedia field, where Seattle-area entrepreneur Allen is one of the nation's most active investors.

With Allen's money, the company's initial goal of raising $2 billion from investors and banks to launch the studio has largely been met.

Allen's investment, which had been rumored for several weeks, is part of some $900 million the three entertainment moguls are raising in exchange for a one-third stake in the firm, of which about $750 million is said by sources to be firmly committed. Allen's investment would give him close to 20 percent of the new company.

Some of DreamWorks' strategic investors are likely to include Microsoft Corp., Capital Cities/ABC and, possibly, a major entertainment company such as MCA.

The investments of Allen, who co-founded Redmond-based Microsoft

with Bill Gates in 1975, range from owning the Portland Trail Blazers professional basketball team to 80 percent of ticketing giant Ticketmaster, although his main companies are the software and multimedia company Asymetrix and the research firm Interval Research. Allen has invested in scores of high-tech companies with mixed success over the years, and now has money in more than 25 of them.

Geffen began courting Allen as an investor after the three announced their plans five months ago, with Allen discussing the plans in depth with the trio at a recent dinner at filmmaker Spielberg's Los Angeles home.

In an interview, Allen cited his interest in the convergence of entertainment and technology as the main reason for his investment, but added that he and his advisers at the Bear, Stearns investment bank believe that the DreamWorks business plan makes sense as well.

"This magnitude of investment is something you do very carefully," Allen said, adding that he formally signed off on the investment Friday.

Allen becomes what DreamWorks termed the "majority outside investor" in the company. He also will serve on an operating board of directors and a soon-to-be formed strategic board.

He is expected to have a significant say in company strategy, notably as it develops in multimedia and interactive entertainment projects. He said he does not expect to be involved in decisions on film and music.