Reliance ADAG to invest in Steven Spielberg’s DreamWorks

MUMBAI: In a coup of sorts, Indian business tycoon Anil Ambani is about to ink a mega deal in the entertainment sector with Steven Spielberg’s DreamWorks SKG.

As per a report in The Wall Street Journal, the deal will see Reliance Anil Dhirubhai Ambani Group (ADAG) bankroll Spielberg’s DreamWorks SKG with $500 million – $600 million. ADAG and the DreamWorks founders will form a new movie company, which will make about half-a-dozen films every year.

The mandate of Reliance Big Picture, which is housed under ADAG’s Reliance Big Entertainment, is to focus on media investments outside of India and the DreamWorks development is in line with the same.

According to reports, the new company is likely to be headed by DreamWorks CEO Stacey Snider. Ambani’s cash will allow Spielberg and his partners Jeffrey Katzenberg as well as music baron David Geffen to end their existing agreement with Paramount Pictures, which is owned by Viacom’s Sumner Redstone.

Viacom acquired DreamWorks in 2005 but relations soured between the two last year.

After Spielberg’s exit, Viacom will retain the rights to all films that were jointly created with DreamWorks. Spielberg, on the other hand, will ne allowed to retain the DreamWorks SKG name.

When contacted Reliance Entertainment chairman Amit Khanna, he declined to offer any comments.

This deal, coupled with the ones announced at the Cannes Film Festival with the likes of Nicolas Cage, Jim Carrey, George Clooney, Chris Columbus, Tom Hanks, Brad Pitt and Jay Roach, will give Anil Ambani a major presence and impetus in Hollywood.

Ambani’s exhibition chain – BIG Cinemas (erstwhile Adlabs Cinemas) has already made its foray in the US market and operates approximately 200 screens there. ADAG is expected to invest about $1 billion in its Hollywood foray.

If the Reliance – DreamWorks deal goes through, telecom analysts also expect it to boost ADAG’s telecom business in terms of content for its value added services (VAS) business. Since average revenue per user from voice calls is shrinking, value-added services like movie clips and ringtones are expected to be a major revenue source for ADAG’s telecom business.

The group’s telecom business is incidentally in the midst of acquiring a stake in telecom major MTN based in South Africa, where Bollywood movies are reported to be popular.

Incidentally, this will be DreamWorks’ second association with an Indian company. Earlier this year, DreamWorks Animation tied up with Bangalore based animation company Paprikaas Interactive Services for creative and technical services. This pact is a part of DreamWorks’ alliance with Thomson. Thomson’s entertainment business arm Technicolor holds a controlling stake in Paprikaas.

On the other hand, in May this year, R-ADAG made known its plans to finance Hollywood projects for 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. Plans are to finance three – four film projects of each company. These deals provide for the creation of a development silo for each of the production entities and the possibility of Reliance co-financing projects that emanate from these development deals. For any green lit projects utilizing Reliance co-financing, the filmmakers will enjoy full creative and fiscal freedom.

As far as Indian films are concerned, the company has a slate of 69 films in various Indian languages like Hindi, Bengali, Tamil etc, which are in various stages of development. Film deals have also been inked with the likes of Vidhu Vinod Chopra and Excel Entertainment (Ritesh Sidhwani and Farhan Akhtar).

Additionally, ADAG is firming its plans on the direct-to-home (DTH) service and television channels’ launch later this year.