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DreamWorks ties up with India's Reliance
Deal comes as financing in Hollywood is becoming increasingly tight due to the credit crisis.
- Reuters
- Published: 23:52 September 20, 2008
Los Angeles: The principals behind DreamWorks SKG on Friday signed a long-expected deal with Reliance Anil Dhirubhai Ambani Group (Adag) of India to start a new $1.2 billion film company, allowing the studio co-founded by director Steven Spielberg to part ways with Paramount Pictures.
The Hollywood-Bollywood linkup of DreamWorks and the Mumbai-based entertainment, financial and telecommunications giant caps two years of speculation and feuding between Spielberg and his DreamWorks co-founder David Geffen with executives from Paramount and its corporate parent, Viacom Inc.
DreamWorks had no immediate comment on formation of the new film company, which two sources close to the deal valued at $1.2 billion.
The transaction was confirmed in a statement by Paramount, saying it had waived "certain provisions" from its original deal with DreamWorks "to clear the way for the DreamWorks principals and their employees to join their new company without delay".
Investment
Under the deal, as reported by The Wall Street Journal, Reliance will invest about $500 million in equity, while JPMorgan Chase & Co. will provide $700 million in debt toward the new venture.
The basics of the pact first came to light in June, but the fine points of the agreement have been under negotiation until this week, sources said.
With the deal completed, it is expected the DreamWorks principals will turn their attention to finding a partner to distribute roughly six DreamWorks films a year.
Spielberg has long ties to General Electric Co.'s Universal Pictures, which is widely regarded as a leading choice to release future DreamWorks movies. But no deal with Universal is known to have been reached.
Reliance is an Indian conglomerate with operations in telecommunications, financial services and energy, though it has more recently branched out into show business.
The deal between DreamWorks and Reliance comes as financing in Hollywood has become increasingly tight due to the credit crisis on Wall Street.
Access
In turning to Reliance, DreamWorks wins access to a stable source of financing, while Reliance stands poised to use the partnership to expand its reach into the US movie market.
Reliance, which is controlled by billionaire Anil Ambani, in May signed deals with eight Hollywood production houses run by A-list actors, including George Clooney and Brad Pitt.
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