Spielberg-Reliance deal signed - Paramount reaction is very gracefull

So at last the deal has been signed. Spielberg is officially exiting Paramount and setting up DreamWorks SKG as an independent entity with the backing of Anil Ambani's Reliance ADA Group. THR.com broke the news:

Steven Spielberg has finalized a deal to secure at least $500 million in funding from Mumbai-based Reliance Big Entertainment.

In a related transaction, JPMorgan Securities will lead a bank loan syndication giving Spielberg another $500 million or more for a total $1 billion-plus to re-create DreamWorks as a private company, allowing it to sever its current ties with Paramount. Documents were finalized Friday after representatives of the various parties reached a handshake agreement on deal terms Thursday night.

The pleasant surprise was how gracious Paramount was about Spielberg's exit:

In a surprise move, Paramount issued a statement saying that the departing DreamWorks principals were also free to take their employees with them. While the DreamWorks brass had exit clauses in their current contracts, they needed permission to bring other execs or staff along to a reconstituted DreamWorks.

"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 studio said.

Spielberg, DreamWorks partner David Geffen and CEO Stacey Snider are expected to quickly tender their resignations from Paramount. A DreamWorks spokesman declined comment on the developments.

Paramount even issued a letter wishing the exiting team well. The studio has had time to prepare for this departure and plan its reaction. It may also be angling for a future distribution pact with the new DreamWorks. But I would like to believe that the good people at Paramount are sincere. However, others are already busy wooing Spielberg to distribute through them:

Next comes a distribution deal, which is why GE's Jeffrey Immelt and Universal's Ron Meyer were dining with Spielberg and Snider last Thursday and why NBC Universal boss Jeff Zucker spent the better part of that afternoon with Steven planning out the rebuild of the fire-ravaged Uni backlot. Given how Spielberg sees Universal as his professional home (he never moved his offices even after Paramount bought DreamWorks), I've always assumed he'd land there. Now, with Immelt and Zucker paying homage, it looks like another done deal no matter how much Geffen would dearly love to play one studio off of the other and mastermind a bidding war for Spielberg/Snider. And David himself? He keeps telling everyone that all he wants is to say goodbye to the movie biz.

The effectively reveres acquisition of DremWorks in 2005 - which infused new talent and vigor into the seemingly moribund Paramount - was what the studio needed and it is under Brad Gray's leadership much stronger as a result today. So much so that they can afford to see Spielberg leave.

Now the interesting thing will be to see what the Reliance and JP Morgan-backed DreamWorks does. Just don't expect Spielberg to start shooting a masala film with SRK next.

Who lost Spielberg, UTV cracks US Top 20 and Snoop goes Bollywood

An assortment of news with an Indian flavour in the last few days.

It is talked about as if the ink is dry on the paper, but this article from the New York Times gives a bit more context to the Ambani-Spielberg/Reliance-Dreamworks deal under negotiation, particularly the financial climate in which an Indian conglomerate trumped Hollywood studios and traditional investment banks to the world's most commercially successful director:

But there was still an element of shock [following the announcement of the Reliance negotiations]: Hollywood could not come up with a rich enough deal for Mr. Spielberg, the most bankable director in the business and a “national treasure”? His last movie alone, “Indiana Jones and the Kingdom of the Crystal Skull,” has sold $743 million in tickets and is still playing in theaters around the world.

For that matter, there wasn’t anybody on Wall Street willing to write a blank check for the guy with “Jaws” and “Jurassic Park” on his résumé?

The pending deal with Reliance underscores some realities about Mr. Spielberg — mainly that he has become so expensive that few public companies can afford him. Mr. Spielberg’s standard deal, on par with other blue-chip talent, is 20 percent of a movie’s gross from the first ticket sold, although he agreed to a somewhat less aggressive paycheck on the latest “Indiana Jones” installment to offset its high budget.

And:

Hollywood’s seeming inability to close a deal with Mr. Spielberg highlights the shift toward a more corporate, buttoned-down movie business. Just a few years ago, bragging rights often drove business decisions. Steven Spielberg is available? Back up the money truck. We want that jewel in our crown no matter what the cost. And studio bosses could justify such ego-driven loss leaders: In the entertainment business, talent draws talent.

And:

As for Wall Street, the firm belief in Hollywood is that the arrival of Reliance marks the end of the private equity and hedge fund boom that has propped up the industry. With the capital markets in turmoil, terms have tightened substantially for movie deals. Investors are demanding faster payback schedules, better guarantees and even a say in how movies are made and marketed.

So out with the Germans and in with the Indians, confirming once again that Hollywood is colour blind when it comes to foreign investment, as long as it is dollar-green.

Elsewhere follow Indian company UTV has just cracked the Top 20 US distributors list on the strength of several Bollywood hits. From THR.com:

UTV Motion Pictures said Monday that it earned $5.48 million from ticket sales in North America in the first half of the year, becoming the first foreign-language distributor to rise into the ranks of the top 20 distributors in the territory. North America's growing South Asian population flocked to see such UTV releases as the historical epic "Jodhaa Akbar," which earned $3.44 million in ticket sales; action-thriller "Race," which earned $1.37 million; and recent musical release "Jaane Tu Ya Jaane Na," which has earned $539,857 so far.

Not bad, but I am sure that the likes of UTV and Eros can and will climb even higher than this, possibly all the way up to the Top 10.

An unlikely convert to all things Bollywood is bad dog rapper Snoop Doggy Dog. But soon he will be seen duetting on the big screen with Bollywood's comedy star du jour Akshay Kumar. Sayz the Snoopster himself in IHT.com:

"I really dig how much music is infused with the movies" in Bollywood, Snoop Dogg said in an e-mailed response to questions. "Lots of hip-hop tracks sample Indian music, and a lot of their music sounds like it was influenced by hip-hop," he said. "We're putting together something real big" in India, that will include collaborations, live shows and "more movies with some of my Bollywood homies."

"I'm coming to take over Bollywood," Snoop Dogg promised during the video shoot. "I've never been able to come over there and do shows for you all, but now I'm going to come and do shows," he said in a clip that the video's promoters put on YouTube. "This is just the beginning."

I for one can't wait.

Reliance-Spielberg discussions "going well"

I have just returned to Mumbai - which is looking particularly lush and green after several weeks of rain - now that I have secured a permanent work visa. Lots of things have been going on while I attended SAWA and Cinema Expo, but over in the States the discussions to enable Spielberg to set up DreamWorks as a stand-alone studio with Reliance ADAG's support are apparently going well. From THR.com, which leads both the international and domestic daily with the news:

Representatives of Steven Spielberg and the Indian conglomerate Reliance continue to talk daily about terms of a $1.5 billion proposal to fund a privately owned DreamWorks that would produce more than 30 films over the next five years.

Reliance executives are expected to hold sit-down talks with Spielberg reps soon in New York or Los Angeles, though things are going so well they might hold off flying in until a meeting to close the deal later this summer. The business plan being discussed would see Spielberg and top DreamWorks execs create a new company financed with about $550 million in equity funding by Reliance, a senior debt facility and possible additional equity from whichever studio is chosen as a theatrical distributor.

"Things are going well, and God willing we'll get there," said Schuyler Moore, a Strook & Strook & Lavan attorney representing Reliance in the DreamWorks talks.

God willing, indeed. Who knows, perhaps Mr Spielberg will even be persuaded to come out to India at some point, though as you can see from the article above the deal would be signed in Hollywood.

Trades' view of Ambani-Spielberg / Reliance-Dreamworks

The trades follow the scoop by WSJ that there are serious discussions underway for Anil Ambani's Reliance BIG Entertainment financing Steven Spileberg's break-away of Dreamworks from Paramount. THR.com notes:

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 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.

It is no small irony that the same issue of THR has an article called 'Global media gains will be built by BRIC', which observes that 'Growth in the roaring economies of Brazil, Russia, India and China -- the so-called BRIC nations -- will outpace the more mature markets of the U.S. and Western Europe, with PwC forecasting 13.6% average annual growth in BRIC compared with just 4.8% annual growth in the U.S. media industry and 5.4% in Western Europe.' It is just that the PWC report had not anticipated one of the Indian growth engines to set up a virtual studio in Hollywood.

Meanwhile Variety goes into more detail about the implications of this possible deal:

The emergence of Reliance as DreamWorks' principal new financier marks the latest and most dramatic example of talent -- and their agents -- aligning with outsiders and using other people's money.

Beyond emerging as DreamWorks' principal new financier, the Indian company closed development deals with seven Hollywood heavyweights.

At Cannes last month, Reliance trumpeted deals with seven production companies headed by high-profile thesps (Daily Variety, May 19) and this week pacted to pay each company at least $1.2 million-$2 million to develop projects.

More than one option

• (Co) Daily Variety
  Filmography, Year, Role
• (Co) Daily Variety

And

Reliance's deals with Cage, Carrey, Clooney, Columbus, Hanks, Pitt and Roach will potentially give that talent the opportunity to fashion a finished script that can be shopped to studios along with 50% of the film's financing. That will allow the talent to make the most favorable deal possible, because if a studio doesn't want to pay a star or director's usual gross deal, the package can be shopped to another studio.

While CAA is steering Reliance at a deliberately measured pace, the Indian conglom likely sees the arrangement as getting its foot in the door. Reliance may well finance the films itself and make a distribution deal with a studio.

A very exciting time to be working in India, that's for sure.

Is Anil Ambani the new backer of Spielberg?

Could Steven Spielberg and Dreamworks turn out to be the trump cards in the Ambani/Reliance/Adlabs ambition to expand in Hollywood? It would seem so, based on this report by Bloomberg and WSJ:

June 18 (Bloomberg) -- Steven Spielberg and Indian billionaire Anil Ambani are close to forming a venture that may help the movie director's DreamWorks SKG team exit from Viacom Inc.'s Paramount Pictures, the Wall Street Journal reported.

The Reliance Anil Dhirubhai Ambani Group will invest as much as $600 million in the studio, the Journal said, citing people familiar with the matter. The venture may borrow another $500 million to finance about six films a year, the Journal said. Reliance and Viacom declined to comment and spokesmen at DreamWorks were unavailable.

As of now it is still only a rumour, though an interesting one.