Reliance close to a deal with Spielberg

Mumbai giant moves toward Hollywood joint venture

Related story: Spielberg has $1 billion dream

UPDATED 11 a.m. EST, June 19, 2008

LOS ANGELES -- Indian business group Reliance is considering a plan to invest $550 million in return for a 50% stake in a new version of DreamWorks, which Steven Spielberg would create after exiting his deal with Paramount.

The Mumbai-based conglomerate was approached as a potential DreamWorks investor by talent agency CAA and likely will take at least two more weeks to mull the proposition. Hired by DreamWorks chairman David Geffen, entertainment attorney Skip Brittenham has created a detailed business plan that would give Reliance a key role in the new DreamWorks but grant Spielberg extensive creative control of the reinvented studio.

Details including $500 million or so in accompanying bank debt could take the rest of the summer to sort out, and even the issue of ownership control remains fuzzy. Spielberg has been on the hunt for equity and other financing for several weeks or more. The interest from Reliance was first reported on the Wall Street Journal's Web site on June 18.

DreamWorks now is operated by Paramount, but Spielberg might strike a movie distribution deal with another studio once the iconic filmmaker secures his financing. Studios other than Paramount seeking a distribution relationship with DreamWorks include Universal, Disney and Fox.

A well-placed source noted Wednesday that other equity suitors continue to hover and could pounce upon any sign that Reliance can't or won't complete its deal with Spielberg.

Representatives of DreamWorks and Spielberg did not return phone calls seeking comment. Paramount spokeswoman Patricia Shin Rockenwagner declined comment, as did Los Angeles attorney Schuyler Moore, who is advising Reliance.

DreamWorks executives have had occasional run-ins with Pararmount brass since their studio was bought by Pararmount parent Viacom in December 2005, and Spielberg is keen to secure a distribution arrangement with Universal. But at the suggestion of advisers such as Geffen and with Spielberg's personal attorney Bruce Ramer keeping watch, the filmmaker agreed to consider offers from other studios described by one source as "extremely favorable."

Spielberg is expected to begin exit negotiations with Paramount as soon as he secures financing for his reinvention of DreamWorks. The DreamWorks brand would go with him -- along with Geffen and president Stacey Snider -- but any other DreamWorks executives who wish to follow would have to be negotiated away from Paramount.

Spielberg's contract runs until 2010, but he can terminate it at year's end. Geffen and Snider have similar escape clauses at Paramount.

The DreamWorks name is actually controlled by the separate public company DreamWorks Animation. But if Spielberg were to exit Paramount, DWA would almost certainly withdraw rights to the name from Par and grant them to Spielberg.

DWA's distribution contract with Par runs through 2012.

Reliance is one of India's best-known conglomerates, with an $81 billion market capitalization. The oft-squabbling siblings Anil and Mukesh Ambani run various businesses within the Reliance business portfolio, which in addition to entertainment includes energy and telecommunications assets.

If Reliance strikes a deal with Spielberg, it would be the latest in a series of recent moves to expand overseas.

Anil Ambani's Reliance ADA has entertainment interests including India's Adlabs Cinemas, which in March acquired 240 screens in the U.S. Its Reliance Big Entertainment unit also owns businesses active in film production, animation, gaming, music, radio and video distribution.

At the Festival de Cannes in May, RBE announced a $1 billion film fund that has noncompetitive agreements with the production banners of such top Hollywood talent as Brad Pitt, Nicolas Cage, George Clooney and Tam Hanks, among others.

Before that, in February, American billionaire financier George Soros acquired a 3% stake in RBE for $100 million.

Nyay Bhushan in New Delhi contributed to this report.