So now we know with whom David Geffen has been negotiating all these many months. And the newest Hollywood mogul names to put on speed dial are Rajesh Sawhney and Anil Dhirubhai Ambani (one of the world’s Top 10 richest men). I can confirm that DreamWorks has secured $500 million to $600 million from India’s media and entertainment conglomerate Reliance ADA, specifically its Reliance Big Entertainment, and then will add $500 million to $600 million in debt for what will be a total $1.2 billion financing for its new independent film company. I’m told that DreamWorks 2.0 (yes, the principals get back the name) will make about 6 movies a year when it liberates Steven Spielberg from Viacom Inc’s Paramount and all the acrimony of that relationship of the past few years. There’s no need for DreamWorks to negotiate a distribution deal for a while, but I’m told that Fox, Universal and Disney would be in the running. Because of Spielberg’s long history with Universal and the fact his office never moved off the lot, I’ve always assumed DreamWorks would return there. But DreamWorks has a lot of ties to Fox, including Geffen’s close relationship with Rupert Murdoch and Spielberg’s with Fox Filmed Entertainment chairman Tom Rothman.
Meanwhile, DreamWorks and Paramount will battle over Spielberg’s exit and all that joint development. Unentangling could really cost Viacom Inc’s movie studio. Here’s why: Spielberg has the right to terminate his contract as soon as October (because of a key man clause involving David Geffen, who will be leaving in August), even though the famed director’s pact on paper goes to 2010. Even Jeffrey Katzenberg’s public company Dreamworks Animation has an “out” clause after 10 films. But what hardly anyone knows is that Spielberg has the right to elect to be involved in any project that DreamWorks has developed at Paramount. As an ex-Paramount business affairs source once told me, Steven’s so-called “Amblin deal” would apply even if he chooses to leave and is no longer under contract. He’d still make 7.5% of the gross and 50% of the profits to cash break. And if Paramount decides the projects won’t be made, they have to be offered to Spielberg in turnaround. So this means Paramount may have to fork over major moolah. Or the likeliest scenario is that Spielberg uses this huge leverage so that Paramount and DreamWorks wind up horse-trading some key development projects.
On Tuesday night, the Wall Street Journal was the first to break the story that DreamWorks SKG is “close to a deal” with one of India’s biggest showbiz conglomerates to form a new movie venture. Citing people familiar with the situation, the newspaper says Mumbai-based Reliance ADA Group would provide Spielberg and company with $500 million to $600 million in equity. “In Reliance, the DreamWorks team also would have an unusual and ambitious partner in the film business: an Indian firm with interests in telecommunications, financial services and entertainment that wants to build a media empire by financing Hollywood pictures… , the newspape said. “Reliance’s plunge into Hollywood is part of a broader push among India’s corporate titans to take their place on the global corporate stage. The country has now produced global players in software, steel, autos and is building a growing powerhouse in telecommunications.”
Reliance Big Entertainment used the recent Cannes Film Festival to announce several big deals, like providing financing to A-list talent with production houses, like Jim Carrey, George Clooney, Tom Hanks and Brad Pitt. It also has plans to spend more then $1 billion over the next 18 months building its entertainment empire in India and abroad.