"Viacom Inc.'s Paramount Pictures on Friday said it had agreed to sell its DreamWorks film library to financier George Soros' investment fund and Dune Capital Management for $900 million.

Paramount, which acquired the film library in its recent $1.6 billion purchase of DreamWorks SKG, aimed to defray the cost of the deal by selling the DreamWorks library of 59 titles, including ""Gladiator"" and ""American Beauty.""

Under the terms of the sale, Paramount has an exclusive five-year agreement to distribute DreamWorks library films and retains a minority stake in the library as well as an option to buy it back in five years.

Paramount also kept music publishing, sequel and merchandising rights associated with the DreamWorks library.

Viacom's purchase price for DreamWorks, after the sale of the library, will be about $600 million ""after the conversion of certain commercial agreements from debt to advances,"" Viacom said.

Viacom and its broadcast division CBS Corp. were split apart in January to appeal to different classes of shareholders and compete more nimbly.

The DreamWorks acquisition is part of Viacom's plan to revitalize its sluggish movie business by bringing DreamWorks co-founder Steven Spielberg and his ongoing projects into Paramount's fold.

Sanders Morris Harris analyst David Miller said the transaction allows Viacom to delay its purchase of the library and avoid diluting its share price in the near term with added debt.

The DreamWorks purchase also brought Paramount a lucractive distribution agreement with publicly-traded ""Shrek"" maker DreamWorks Animation SKG Inc., and was seen as a coup for Brad Grey, Paramount's new chairman and chief executive.

Viacom swooped in to purchase DreamWorks after lengthy negotiations between the independent studio and General Electric Co.'s NBC Universal broke down over the cash-and-debt deal.

Spielberg co-founded DreamWorks in 1994 with music mogul David Geffen and former Walt Disney Studios chairman Jeffrey Katzenberg, who now heads the animation company.

Spielberg, director of blockbusters like ""Jaws,"" ""E.T. the Extra-Terrestrial,"" ""Raiders of the Lost Ark"" and ""Saving Private Ryan,"" agreed to stay on at DreamWorks as producer-director, and Geffen will remain as chairman.

""It appears as if Viacom is paying $600 million for the rights to have Steven Spielberg and David Geffen on the Paramount lot,"" Miller said.

The two are responsible for producing four to six live action film a year for Paramount, boosting that studio's total output to 14 to 16 pictures in 2006.

DreamWorks recently lured away Universal Pictures Chairman Stacey Snider to become its co-chairman and chief executive.

Source: Reuters."