LOS ANGELES (AP) – An ad in the Hollywood Reporter trade paper in January 1995 announcing the creation of a new movie studio featured a picture of a crescent moon cradling a tiny fisherman and the slogan “A future of opportunities.”

The studio was DreamWorks SKG, the letters representing the names of its founders – Steven Spielberg, Jeffrey Katzenberg and David Geffen.

Two years later, the studio’s first film, “The Peacemaker,” topped that weekend’s box office take. Three years after that, Hollywood’s newest studio snagged its first Academy Award for the quirky “American Beauty.”

“They had hopes,” said financial analyst Harold Vogel, head of Vogel Capital Management in New York. “It was a different world.”

Those grand hopes may soon end if reports that NBC Universal is considering buying Dreamworks are true. NBC Universal is a division of General Electric, based in Fairfield, Conn.

Several news outlets, including the New York Post, have reported the two companies have been discussing for months a deal that could value DreamWorks as high as $1 billion.

Analysts believe a sale to NBC Universal is likely.

“They’ll buy it at a price that will be fairly logical,” Vogel said.

Any deal would not include DreamWorks Animation SKG, which was spun off in an initial public offering last year, reports said.

The Wall Street Journal reported that NBC Universal executives would brief the GE board on Friday about the ongoing talks and might seek exclusive discussions with DreamWorks.

Representatives of GE, DreamWorks and NBC Universal declined comment Friday.

DreamWorks has had some hits over the years and more than its share of misses.

Its latest film, “The Island,” tanked at the box office last week and almost certainly will not make back its more than $120 million cost.

The studio’s ambitious plans to become a major player in the music industry ended in 2003 when it sold DreamWorks Records to Universal Music Group. And its efforts to produce television shows has stalled. Its last hit was the ABC show “Spin City,” which went off the air in 2002.

“DreamWorks was born in hype, and it’s hard for anything to measure up to that,” said Martin Kaplan, associate dean of the University of Southern California Annenberg School for Communication.

Kaplan once worked for Katzenberg at The Walt Disney Co. and wrote a film script co-produced by Spielberg’s Amblin Entertainment.

“In a town built on wishing ill of your colleagues it was a glass jaw waiting for a sucker punch,” he said.

It has been difficult for DreamWorks to operate as a private company with limited capital, analysts said. As films and TV shows have become more expensive to produce, only the big media conglomerates could afford to take costly risks.

“The ambitions were too big for the limited amount of capital they had,” Vogel said.

The spinoff of the more successful and profitable animation division was aimed in part at repaying early backers of DreamWorks, including Microsoft billionaire Paul Allen.

But that plan was put on hold when shares of DreamWorks Animation SKG fell after the company warned earlier this month about lower earnings due to lower than expected sales of the “Shrek 2” DVD.

One reason the deal with NBC Universal might happen is Spielberg’s long association with Universal Studios. His Amblin Entertainment office is on the Universal lot, as is DreamWorks’ headquarters.

DreamWorks also has a distribution agreement with Universal, making a combination of the two companies seamless.

Vogel said NBC Universal would benefit from distributing the DreamWorks library of films and TV shows on its cable networks and through sales of home videos.

“It’s a logical extension of what they’ve got,” Vogel said.

AP-ES-07-29-05 2356EDT