DreamWorks returns to roots
Reliance deal worth $500-600 million
With the deal, DreamWorks takes a giant step away from its current relationship with Paramount -- but it's possible the two will still be working together, albeit under very different circumstances.
Steven Spielberg and head of production Stacey Snider will be the key players in the streamlined DreamWorks, whose structure will be similar to that of Amblin, Spielberg's former shingle. The big difference is that, unlike Amblin, DreamWorks will finance and own its properties.
The company is aiming to raise an additional $500 million and would regain its autonomy as well as ownership of titles.
But the films will still need a distributor, and Par is a possible contender in that field. In addition, with many projects in development, it's possible they will end up working together, with Spielberg using his leverage to control certain pictures.
Another factor in the ongoing saga: Jeffrey Katzenberg and his DreamWorks Animation are contractually bound to Par through 2012, but after the pact ends, it's conceivable he would rejoin his DreamWorks live-action colleagues.
Katzenberg could trigger an escape clause to end the Par deal in 2010 in exchange for a $150 million payoff.
David Geffen, a crucial player in all things DreamWorks, is not expected to play a major role in the revamped company.
Paramount's slate will not be affected until 2010. At that point, the studio would have to fill any void with more homegrown fare like the upcoming "Star Trek" installment and "G.I. Joe." Par would also likely rely more heavily on its Marvel partnership to spawn franchises like "Iron Man." As for DreamWorks' box office contribution, Paramount has earned $930 million domestically so far this year; live-action titles from DreamWorks represent about 5% of that sum.
As for Reliance, it's a name that is well-known in India but, despite some U.S. investments, was fairly low profile in Hollywood before this week.
Valued at an estimated $100 billion, Reliance reaches into every aspect of India's media and communications sector, from owning India's largest film production and processing company, Adlabs, to radio stations, satellite TV channels and multiplexes in India and the U.S.
After announcing a series of deals with major Hollywood stars, Reliance is working with DreamWorks on the one element that was missing at the mega-conglom: productions to fill its pipeline.
Foreign investment in Hollywood hasn't always worked out so well, with Matsushita's troubled tenure as the owner of Universal in the early to mid-'90s the most notable example.
But Reliance chief Anil Ambani has grand plans for his conglom in the global media, communications and entertainment sector and is confident that these Hollywood mega-deals will be mutually beneficial.
With Wall Street growing increasingly hesitant about funding films, Hollywood benefits from the fact that India's enormous growth in info technology, mobile telecommunications and real estate gives the country vast wealth and an appetite to invest abroad. Even better, the Indian currency is 20% stronger against the U.S. dollar than it was five years ago.
Hollywood is also a direct beneficiary of sibling rivalry. When Dhirubhai Ambani, the rags-to-riches founder of Reliance Industries, died in 2002, his conservative older son Mukesh wanted to stick with the conglom's mix of supermarkets, textiles and petrochemical plants.
But Anil Ambani had other things in mind. After a few years of in-fighting, the decision was made to divide Reliance into two rival congloms.
Mukesh, 51, retained the name Reliance Industries, but Anil, 49, branched into showbiz by acquiring a 71% stake in Adlabs for $83 million in 2005.
Anil now controls Reliance Communications, which is commonly known in the Indian showbiz industry as Reliance ADAG (which stands for Anil Dhirubhai Ambani Group).
The DreamWorks deal is one more step as Anil's Reliance seeks the product to fill its pipeline, following deals that Reliance Big Entertainment (part of Reliance ADAG) announced with fanfare at the Cannes film fest last month with Nicolas Cage, Jim Carrey, George Clooney, Chris Columbus, Tom Hanks & Gary Goetzman, Brad Pitt and Jay Roach. Those deals were touted as part of Reliance Big's $1 billion investment in Hollywood.
At the time, Reliance execs described the deals as "development silos," saying the pacts were designed to supplement the existing Hollywood funding for those individuals' production banners. In exchange, Reliance gets a financial stake in the pics and, whenever possible, Indian distrib rights.
Also in Cannes, Reliance Big lifted the veil on an ambitious slate of 69 Indian movies with budgets ranging from $1 million to $40 million.
Reliance did its first major Hollywood deal in 2006, cutting a five-year, multipic deal with Ashok Amritraj's Hyde Park Entertainment. The first fruits of that deal will be the movie "Street Fighter: The Legend of Chun-Li," directed by Andrzej Bartkowiak and set for release by Fox in February. The second film is "The Other End of the Line," from helmer James Dodson, to be released by MGM.
In January 2007, Reliance's Adlabs Films struck a pact with MTV Networks India to produce movies aimed at the Indian youth market.
Reliance's entertainment strategy has attracted the interest of famed financier George Soros, who ponied up $100 million for a 3% stake in Reliance Big Entertainment in March.
Also in March, Reliance bought up a bunch of U.S. multiplexes in such Indian expat-heavy markets as New York, Los Angeles, Chicago and D.C. -- giving it 250 screens in 28 North American cities. The plan for what has been dubbed Big Cinemas is to program a mix of Indian-produced pics and Hollywood fare.
In India, Reliance owns about 150 screens and a popular Imax theater in Mumbai, but it is in the midst of a multiplex acquisition spree aimed at boosting its holdings to about 300 screens by year's end.
Reliance Big mostly consists of telco and Internet-related businesses. The unit is also India's biggest FM radio owner and will launch a direct-to-home satellite TV platform serving India and South Asia and a bouquet of new channels in the fall.
Anil Ambani's lieutenants on the showbiz side include Reliance Capital senior VP Anil Arjun, who spearheaded the U.S. exhib acquisitions. Reliance prexy Rajesh Sawhney and Reliance Big Entertainment Amit Khanna took the lead during the company's press conference at Cannes.
Anil's older brother owns Indian Premier League soccer team the Mumbai Indians but stays out of showbiz circles. Forbes pegged Mukesh's personal worth at $43 billion this year.
Though Mukesh is considered conservative, he has an expensive lifestyle. He is constructing a 27-story Mumbai home that's touted as the world's most expensive house at an estimated cost of $1 billion.
Anil's personal wealth is about the same as his brother's, but he is far more showbizzy. He is married to former actress Tina Munim, and his friends include longtime Bollywood star Amitabh Bachchan.
Anil has become a tabloid favorite with his rising prominence in global biz circles and the ongoing feud with his brother. Anil is also described as a fitness freak, since he trimmed down considerably from an estimated 250 pounds.
(Michael Fleming in New York contributed to this report.)
