Hollywood's Paramount Pictures, a unit of Viacom Inc., will pay $1.6 billion in cash to buy DreamWorks SKG.

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The deal gives Paramount all of DreamWorks' current projects in development, a partnership with Steven Spielberg and David Geffen and an exclusive, worldwide distribution agreement with DreamWorks Animation, maker of such hits as the "Shrek" films, Paramount said late Sunday.

Paramount is in advanced discussions with "identified investors" to sell DreamWorks' film library, promptly after closing, but will retain distribution rights. Paramount would continue to have distribution rights to the film library.

Spielberg and Geffen will be responsible for producing four to six live action films per year of Paramount's total target slate of 14-16 films, which the company expects to achieve by 2006.

Additionally, Paramount will enter into an exclusive seven-year distribution agreement to release films from DreamWorks Animation, the business unit spun off from DreamWorks as a public company in 2004, throughout the world for the next seven years.

Paramount will earn the same 8 percent distribution fee DreamWorks Studios was getting. As a condition of the deal, DreamWorks Animation will receive $75 million in cash.