Paramount Pictures has bought rival movie studios Dreamworks SKG.

Viacom, who owns Paramount, is paying $1.6bn (£914m) for the company. It will take on Dreamwork's debt and spend more than $1bn in cash.

Dreamworks was set up as an independent studio 11 years ago, combining the creative talents of three big names - Steven Spielberg, David Geffen and Jeffrey Katzenberg. They reportedly plan to stay with the company.

The company created blockbusters including Gladiator, American Beauty, and Saving Private Ryan – the rights to which will now go to Paramount. Reports say it plans to sell off the rights, which would expectedly fetch $850m to $1bn.

Spielberg said: “I am thrilled by today's announcement of the deal with Viacom/Paramount, who came recently to the table and were able to conclude and sign agreements quickly.???

He added that he was "saddened" that a planned sale to Universal studios fell through. “After long negotiations and many compromises, we were unable to come to terms with Universal's parent company, GE.???