Spielberg's Reliance deal 'moving along fine'

Partnership will fund a newly constructed DreamWorks

Steven Spielberg should have his equity partnership with Reliance Big Entertainment in place within a week, after execs of the Mumbai film group sorted through final details of an accompanying debt plan in a conference call Thursday.

"Everything is moving along fine," a deal insider said.

The deal involves a $550 million commitment for Reliance for a 50% stake in a newly constructed DreamWorks, with a complementary bank agreement contributing up to $750 million for a $1.3 billion package. A source close to the talks noted that the current tight credit market means bank debt would come with "onerous" costs, so some thought is being given to reducing the loan component to $550 million for a $1.1 million financing package.

It's likely that JPMorgan will lead a bank group of perhaps four lending contributors, if only because of its current stature as the most stable investment bank in a blue-chip lending community battered by fallout from the nation's economic tailspin. But a JPMorgan rep declined comment, and a well-placed source suggested that a search for the best loan terms could turn up a bank further off the beaten path.

The endgame for Spielberg is taking back control -- and ownership -- of the movies he produces. Paramount may or may not still distribute his films, but in the future its equity participation in DreamWorks projects likely will be limited to sequels of past DreamWorks/Paramount productions.

Under the plans being finalized, both Spielberg and DreamWorks CEO Stacey Snider would leave Paramount by year's end under their contracts' opt-out provisions, while DreamWorks chairman David Geffen -- who's been at the center of Spielberg's efforts to resurrect DreamWorks as a separate company -- likely would bow out of the operation.

A business plan written by entertainment attorney Skip Brittenham pencils in September 2009 as the goal for getting a first film project before the cameras, with a slate of six films per year envisioned after that. In the shorter term, it's also anticipated that Snider and others would continue to shepherd several projects currently in active development at Paramount under the DreamWorks brand.

Spielberg and Snider will have to engage in complicated exit negotiations likely to stretch into September, sorting title by title through the DreamWorks/Paramount development slate to discuss issues of ownership and oversight.

Then in September, a search for a new distribution agreement would get going in earnest. Most industry executives expect Spielberg ultimately to opt for a deal with Universal, where the DreamWorks executive team has continued to keep their production offices even while working for Paramount.