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Allen increases DreamWorks stake

The venture capitalist reportedly will become DreamWorks' biggest shareholder, signaling his increasing interest in the content arena.

Venture capitalist Paul Allen has increased his stake in entertainment company DreamWorks SKG, according to his investment group, signaling his increasing interest in the content arena.

"It has been a good investment to date, and increasing his ownership demonstrates his faith in the company and its partners," said Susan Pierson, a spokeswoman for Allen's Vulcan Ventures.

Pierson declined to disclose the size of the stake or Allen's previous holdings in the company. DreamWorks also declined to comment.

According to a report in the Wall Street Journal, Allen has agreed to acquire more than half of the stake currently held by Cheil Jedang, a South Korean food company. That deal, estimated to be worth more than $160 million, will push Allen's holdings to more than a 24 percent stake in DreamWorks.

However, a spokeswoman for Cheil Jedang disputed the Journal's report, denying that the company had agreed to sell half of its approximately 30 percent stake in DreamWorks. "We're denying the whole thing," said Min Kim, a spokeswoman for Cheil Jedang. "We don't know where that rumor came from."

If the 24 percent figure is correct, Allen, a Microsoft cofounder, would become the largest shareholder in DreamWorks. The company's three founders, Steven Spielberg, David Geffen, and Jeffrey Katzenberg, each hold smaller stakes of about 22 percent, according to the report.

Allen is a DreamWorks board member, a role that will not change with his increased stake in the company, Pierson said. (Allen is also an investor in CNET: The Computer Network.)

In the early 1990s, most of Allen's investments were aimed at technologies that fostered the growth of the Internet's infrastructure. Lately, his focus has shifted to content, based on his belief that strong content ultimately will drive the demand for, and use of, new technology.

Last month, Vulcan Ventures invested in video e-commerce company Reel.com as part of that company's second round of venture funding.

Reuters contributed to this report.