MUMBAI: DreamWorks Animation SKG will begin operating under its new seven-year distribution deal with Paramount Pictures. The deal will begin with the rights to distribute DreamWorks Animation films in theatrical, home entertainment and television markets on a worldwide basis beginning with the next release, Over the Hedge.

As previously announced, the new agreement was contingent on the closing of Paramount's acquisition of the company's previous distribution partner, DreamWorks Studios.

Paramount Pictures will be responsible for the marketing and distribution of DreamWorks Animation films and will earn the same eight per cent distribution fee that had previously been paid to DreamWorks Studios.

The new agreement with Paramount expires by the end of 2012, which is two years longer than the original distribution deal with DreamWorks Studios. As a result of the new deal, DreamWorks Animation received $75 million in cash which it has used towards the repayment of debt.