DreamWorks and Indian media company Reliance have completed their deal to create a $1.2 billion stand-alone studio, reports the WALL STREET JOURNAL.
According to insiders, DreamWorks co-founder Steven Spielberg and DreamWorks CEO Stacey Snider can now leave Paramount Pictures to start their own film company. In the signed agreement, Reliance ADA Group, based in Mumbai, will invest $500 million equity and another $700 million in debt through J.P. Morgan Chase & Co. The venture is expected to produce a slate of around six films per year.
Talk of the deal first surfaced in June, and dragged on for longer than insiders had thought initially. DreamWorks was sold to Viacom in 2006 for $1.6 billion, and has had a contentious relationship with Paramount from the beginning.
Spokespersons for both DreamWorks and Reliance had no comment on the deal.
Now that DreamWorks is free from Paramount, the question remains who will distribute those six films a year. Universal, despite recently denying funding for Spielberg's TINTIN epic, is still considered a likely top choice -- the famed director's offices still remain on their lot. DreamWorks is also planning on a deal with HBO.
Once the dust has settled, DreamWorks principal David Geffen will likely resign from Paramount, but is not expected to be part of the new venture. He reportedly is saying wants out of the film business altogether.
Paramount will continue their professional relationship with Spielberg and Snider, however, including sharing rights to upcoming sequel TRANSFORMERS: REVENGE OF THE FALLEN. At one point, insiders thought Spielberg would take projects with him, but it is now likely that those films will remain at Paramount with Spielberg receiving payment for his involvement.
Reliance has stakes in telecommunications, financial services and entertainment, and hopes to create a name for itself in Hollywood. At Cannes Film Festival earlier this year, Reliance's entertainment division, Reliance Big Ent., announced they would invest $1 billion over the next 18 months to make that a reality.
Since DreamWorks' arrival at the Paramount lot, tensions have run high. Geffen and Spielberg clashed with Paramount's CEO Brad Grey, and when it became public knowledge that DreamWorks was trying to leave Paramount last fall, tensions boiled over when Viacom CEO Philippe Dauman publicly said the departure was "completely immaterial" to the company's financials.
Paramount released a statement (via Nikki Finke's DEADLINE HOLLYWOOD DAILY) on Friday saying, "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 J.J. 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."
Finke also reports that her sources said the deal was done last week and was likely to be signed any day. Further, her sources say DreamWorks informed Paramount within the last 24 hours that the deal with Reliance was done. Today, Paramount waived certain provisions from the original deal to clear the way for DreamWorks to leave.
