The swoop by Paramount, part of the US media giant Viacom, finally brings the curtain down on a bidding war with rival entertainment studio NBC-Universal, the group behind the remake of King Kong, which hits British cinema screens this week.

Dreamworks, co-owned by Spielberg and entertainment executives Jeffrey Katzenberg and David Geffen, had been in takeover talks with Universal for several months, but the two sides had been unable to agree a price. The bidding war underlines the demand for quality film-making assets in the cut-throat world of Hollywood.

The deal is part of a broader shake-up in Tinseltown, following the defection of the Weinstein brothers, Bob and Harvey, from their Miramax studio earlier this year. The Weinsteins have set up their own business with backers that include Goldman Sachs, the investment bank, and Sir Martin Sorrell’s WPP advertising group.

Viacom is thought to be investing between $600m and $700m of the asking price, with the remaining cash coming from a group of private-equity investors. The $1.6 billion cost includes about $400m of Dreamworks’ debt.

As well as acquiring the studio, Viacom will end up owning Dreamworks’ library of 60 titles, including Saving Private Ryan, and the right to distribute films made by its animation division, which was separated from the live action studio last year and given its own listing on the New York Stock Exchange.

• BOB IGER, the new chief executive of Walt Disney, has called in consultants from Bain & Co to lead a structural review of the $48 billion media giant. Bain’s appointment raises the intriguing prospect that Iger could dismantle the media empire built up by Eisner over many years.

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