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Spielberg And India Firm Close To DreamWorks Deal

The principals of DreamWorks SKG are close to a deal with one of India's biggest entertainment conglomerates, reports THE WALL STREET JOURNAL this morning.

According to people familiar with the situation, the deal would form a new movie venture, giving director Steven Spielberg the cash to finance his DreamWorks team's departure from Paramount later this year.

Mumbai-based Reliance ADA Group would provide Spielberg with $500 to $600 million in equity, moving them one step closer to leaving Viacom, which has been a contentious relationship from the start.

In Reliance, the DreamWorks team would also have an unusual and ambitious partner in the film business: an Indian firm with interests in telecommunications, financial services and entertainment that wants to build a media empire by financing Hollywood movies.

Reliance would get a large stake in the new company. DreamWorks would likely need another $500 million or so in debt financing elsewhere to give its new venture enough money to make about six films a year.

As reported earlier, Spielberg would need a studio to distribute the films, with Universal the favorite. Fox is also thought to be a serious contender.

A spokesman for DreamWorks declined to comment to the JOURNAL.

Reliant's entertainment division has already announced a slate of investments in Hollywood, including providing financing to top talent with production houses, like Jim Carrey, George Clooney, Tom Hanks and Brad Pitt. The company has said it will spend more than $1 billion over the next 18 months to build its empire in India and abroad.

Reliance would provide funding to allow talent to acquire film projects before taking them to the respective studios at which they have agreements. Reliance could then go into business with the studios, as a partner financing up to 50 percent of the film's production, agreements commonly referred to as "development silos."

In recent years, Mumbai's film industry -- Bollywood -- has been growing around the world. Walt Disney, for example, has a large stake in UTV Software Communications, one of India's leading production houses.

DreamWorks Animation head Jeffrey Katzenberg is in somewhat of an awkward situation when his longtime colleagues Spielberg and David Geffen leave Paramount -- the animation studio will remain at Paramount.

And Paramount may be in business with DreamWorks for some time. The two share the rights to many projects, including last year's hit TRANSFORMERS. People close to the situation say Spielberg's crew may bargain with Paramount to take certain projects with them.

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