NEW INFO THROUGHOUT: I reported last week that the much anticipated, long awaited DreamWorks-Reliance deal was already done, and likely to be signed any day. But at the time I was told there were just some other issues surrounding the debt financing that had to be wrapped up. Friday, the deal papers were faxed and signed. (“The world is in financial collapse, and we just got $1.2 billion,” one insider exulted.) My sources tell me that, immediately after, DreamWorks informed its owner Paramount that it had just executed its deal with the big Indian entertainment giant Reliance Anil Dhirubhai Ambani Group, owned by one of the world’s richest men, 49-year-old Anil Ambani. Right after, Paramount shocked the studio started by Steven Spielberg, David Geffen and Jeffrey Katzenberg by waiving certain provisions from the original deal to clear the way for the DreamWorks principals and their employees and their producers to leave “without delay”. On paper, Spielberg’s contract extended to 2010. But Geffen had the right to leave this summer, which meant Spielberg had the right to terminate his contract as soon as October 31st if Geffen were gone. (Even Dreamworks Animation run by Katzenberg has an “out” clause after 10 films.) Once Geffen resigned, Spielberg had to give Paramount 60 days’ notice, so the earliest he could have exited Paramount after signing the Reliance deal would have been November 19th. I’m told that Geffen didn’t even have a chance to resign from Paramount: instead, he found out he is free to leave as of Friday along with Spielberg, DreamWorks Studios co-chairman and CEO Stacey Snider, and 150 other DreamWorks employees, and producers Ben Stiller, Walter Parkes and Laurie MacDonald, Ivan Reitman and Tom Pollock, Nina Jacobson, and Sam Mendes. Because Paramount speeded up the transition process, the new DreamWorks must decide ASAP whom it will bring over.
Thus ends a 2-year-old Paramount-DreamWorks buyer-buyee relationship that soured almost from the first day. Now the two studios may bicker over the 200 active projects they have together. (But ill will was mitigated Friday when Paramount’s parent company Viacom offered Steven Spielberg and Peter Jackson 100% financing for the duo’s family movie Tintin trilogy, as I reported here exclusively.)
Neither Geffen nor Katzenberg will be part of the reconstituted DreamWorks. Geffen has always said he planned to retire from the movie biz. And Katzenberg has been running the separate public company DreamWorks Animation whose slate is still distributed by Paramount. So the new company will be the old DreamWorks in name only. Now Hollywood’s biggest and richest indie, it will be run with complete autonomy by Steven Spielberg and Stacey Snider in 50/50 partnership with India’s giant entertainment conglomerate which financed the $1.2 billion film company. (Though the official press release calls it a $1.5B deal.) Mumbai-based Reliance ADA Group will invest $500 million equity and provide another $700 million in debt through J.P. Morgan Chase toward the new venture, which will produce a slate of about 6 films a year. CAA motion picture agent Manny Nuñez is the unsung hero of the deal by acting as facilitator. (See my CAA Put DreamWorks With Reliance: Hollywood Agency To Pocket Millions.) The deal now means that David Geffen has engineered his most fervent wish: to give Spielberg and Snider enough independent financing so they could leave Paramount behind and answer only to themselves.
Next comes a distribution deal, which is why GE’s Jeffrey Immelt and Universal’s Ron Meyer were dining with Spielberg and Snider last Thursday, and why NBC Universal boss Jeff Zucker spent the better part of that afternoon with Steven planning out the rebuild of the fire-ravaged Uni backlot. Given how Spielberg sees Universal as his professional home (he never moved his offices even after Paramount bought DreamWorks), I’ve always assumed he’d land there. But I hear Steven is concerned that GE might decide to sell NBC Universal, especially if the studio is conbined with Warner Bros which would create too much product. Nevertheless, with Immelt and Zucker paying homage to Spielberg, it looks like another done deal to be negotiated by Hollywood super-lawyer Skip Brittenham.
The official DreamWorks/Reliance news release was late coming because the Indian company had to sign off on the wording (below) in prepration for an announcement Monday. But Paramount jumped the gun Friday morning with an artfully worded press statement that said basically, “Don’t let our iron studio gates hit you on the way out” (also below). That actually was a relief to DreamWorks whose principals were worried about even preparing for a transition “because nobody wanted to be in breach of contract”.
After Paramount purchased DreamWorks in 2006, many top DreamWorks execs moved into big jobs at Paramount, like Jim Tharp into head of distribution, and Kelly Avery into prez of home entertainment. They’re expected to stay put. But about 150 people are classified as DreamWorks employees even if they receive Paramount paychecks — including aviation-related workers, security guards, even the chef. Paramount is hoping Spielberg/Snider make the decisions sooner rather than later which employees to take to the new company and get them off the Paramount payroll. “We hope as a practical matter they respond quickly,” a Paramount insider told me. But there’s no official deadline yet.
Same thing goes for the producers and production companies housed at DreamWorks, like Stiller’s Red Hour Films and Reitman/Pollock’s Montecito Picture Company or Parkes/MacDonald.
Paramount estimates 200 projects are active between the studio and DreamWorks, and believes it owns all of them. However, as I’ve previously reported, there may be friction arising out of the exact terms of Spielberg’s deal with Paramount. The director and producer 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, Spielberg’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 the projects won’t be made, they have to be offered to him in turnaround.
Physically-speaking, DreamWorks never moved onto the Paramount lot because Spielberg never left the Universal lot. (DreamWorks execs used guest offices inside the different Paramount departnments when they had to sit in face-to-face meetings.).
Stay tuned. There’ll more details in coming days. Here are the press releases:
Statement from DreamWorks/Reliance: Mumbai, India, September 20, 2008 — The Reliance Anil Dhirubhai Ambani Group has reached an agreement with Steven Spielberg and Stacey Snider to jointly form a new motion picture studio based in Hollywood, Los Angeles, USA.
The US$ 1.5 billion deal will be funded through a combination of equity capital and debt financing from the international capital markets.
Steven and Stacey will provide the leadership in operating the joint venture company, and will work closely in partnership with Reliance to create a powerful new film business, aimed at global audiences.
Reliance ADA Chairman Anil Ambani said, “I am personally delighted to be in business with two of the strongest and best known executives in Hollywood. Steven is a creative genius responsible for an incredible list of critically acclaimed and commercially successful films and Stacey has a proven expertise in the difficult business of running a fiscally responsible studio while maintaining talent relationships at the highest level.”
“This strategic partnership between Reliance, and Steven and Stacey will be a cornerstone of our ‘Hollywood’ strategy as we continue to build film production, distribution and exhibition interests that reach across the globe,” he added.
“Stacey and I are so excited about this venture with India’s Reliance which opens a new door to the future of DreamWorks Studios,” said Steven Spielberg. “Reliance Chairman Anil Ambani’s visionary step has given us a new set of dreams to work toward. I thank them for their faith in us and their faith in the movies, and am looking forward to working closely with them in the future.”
“In their respective fields, Reliance and Steven Spielberg represent the highest levels of excellence,” said Stacey Snider. “Bringing them together – combining the global reach of Reliance with Steven’s creative vision – is a once-in-a-lifetime opportunity for all of us. I’m grateful to David Geffen, whose business genius and loyalty helped make this deal happen.”
The Reliance Anil Dhirubhai Ambani Group is one of India’s top 3 private businesses with a market capitalization of over US$ 50 billion. Its net worth is in excess of US$ 14 billion, with cash flows of nearly US$ 3 billion, and a net profit of US$ 2 billion. The Group owns highly successful companies with leadership positions in the fields of telecommunications, financial and insurance services, generation, transmission and distribution of power, infrastructure and media and entertainment. Across its different companies, the Group has India’s largest customer base of over 150 million, and it has one of the world’s largest shareholder families of over 12 million. Reliance ADA Group is headed by Chairman Anil Dhirubhai Ambani, aged 49.
Reliance BIG Entertainment and its affiliates represent the largest integrated media and entertainment eco-system in India. Key initiatives include: Movies (Hollywood and Indian), Animation, Music, Home Video/DVD, Multiplexes across, India, the US, and Asia, Broadcasting, Sports, Gaming, Internet and mobile portals, with direct opportunities in delivery across all emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV.
Reliance BIG Pictures, a division of Reliance BIG Entertainment, is the most prolific producer of Indian films in all major languages, with a slate of nearly 100 films to be completed in the next 3 years. In May 2008, Reliance BIG Pictures announced separate development deals with Nicolas Cage’s Saturn Productions, Jim Carrey’s JC 23 Entertainment, George Clooney’s Smokehouse Productions, Chris Columbus’ 1492 Pictures, Tom Hanks’ Playtone Productions, Brad Pitt’s Plan B Entertainment, and Jay Roach’s Everyman Pictures. More development deals are planned.
Statement from Paramount: “We congratulate Steven, David and Stacey, and wish them well as they start their newest venture. Steven is one of the world’s great story-tellers and a legend in the motion picture business. It has been an honor working closely with him and the DreamWorks team over the last three years and we expect to continue our successful collaboration with Steven in the future.”
“To facilitate a timely and smooth transition, Paramount has waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company without delay.”
“The acquisition of DreamWorks has been beneficial both creatively and financially for Paramount and accelerated our strategy of focusing on our world-class franchises and brands. It gave us a solid slate of films to fill out our lineup, a valuable catalog we were able to monetize, and a development pipeline that will bear fruit for us for years to come. The acquisition jump-started our rebuilding plans, which are now well underway and include promising upcoming releases such as Star Trek by JJ Abrams, G.I. Joe by Stephen Sommers, Transformers 2 by Michael Bay, David Fincher’s The Curious Case of Benjamin Button, and Jon Favreau’s Iron Man 2, among many others.”
- CAA Put DreamWorks With Reliance: Hollywood Agency To Pocket Millions
- GE’s Immelt Takes Spielberg To Dinner; Zucker & Director Plot Universal Backlot
- Greenlight For DreamWorks-Reliance Deal
- Finke/LA Weekly: Credit Crunch Hits Paramount
- Paramount Financing Loss: Crisis Or Not?
- DreamWorks Finds Indian Big Bucks To Form New Film Biz
- Spielberg vs Paramount: The Real Story
- Still More Inaccurate Info Re DreamWorks
- Zucker Hints At Uni-DreamWorks Reunion
- NY Times Reports DreamWorks All Wrong
- Anchors Aweigh: Geffen & Murdoch Cruise
- Geffen Hits Back Redstone In Vanity Fair
- DreamWorks & NBC Universal Break Bread In Very Public Forum
- Paramount’s Brad Grey: Happy At Last
- Brad Grey No Longer Bosses DreamWorks
- Spielberg Tells Grey He’s “Very Happy”
- Now Paramount/DreamWorks Deal Looks Better With Benefit Of 20/20 Hindsight
- ‘How High Do We Jump, Mr. Spielberg?’
- Their Dinner About Brad… Sumner Feasts
- NYT: Par Not A Dream Deal For Spielberg
- Finke/LA Weekly: Brad’s Boorish Globes
- Geffen To Redstone: Hire Jeffrey. Redstone to Geffen: No.