According to The Hollywood Reporter, Viacom's Paramount Pictures announced Sunday that it has agreed to buy DreamWorks SKG, the independent film and TV studio founded 11 years ago by Steven Spielberg, Jeffrey Katzenberg and David Geffen, in a deal worth $1.6 billion in cash and debt. In order to limit its cash outlay, though, Paramount, while retaining distribution fees, plans immediately to sell the existing DreamWorks library of 59 films to other investors.

Under the agreement, Paramount is acquiring all of DreamWorks' projects currently in development; DreamWorks' television division and its properties; and exclusive rights to future DreamWorks Animation TV characters in TV shows. Although the publicly traded DreamWorks Animation is not part of the deal, Paramount will take the worldwide distribution rights to its movies, currently held by the original DreamWorks, beginning in 2006 and continuing for seven years.