Reliance Big Entertainment, DreamWorks close to finalizing $1.5 billion joint film venture

According to sources close to the development, the world's sixth richest man, Ambani, is keen on partnering with Spielberg, the highest-grossing film director ever, and is ready to finance his movies. Ambani's offer may be the ideal opportunity for the DreamWorks founders to end their bitter 3-year old association with Paramount Pictures, the Hollywood studio owned by Viacom.

Viacom bought DreamWorks in 2006 for $1.6 billion with the aim of using the company as a creative engine to reinvigorate Paramount but angered Spielberg and other DreamWorks founders when Philippe Dauman, Viacom's CEO told investors recently that Spielberg from the company would be "completely immaterial."

Paramount has tasted box office success with offerings such as Iron Man and Indiana Jones and the Kingdom of the Crystal Skull this year and hopes that J.J. Abrams, who created the "Lost" television series, would become a worthy creative successor to Spielberg.

Steven Spielberg and music mogul David Geffen, co-founders of DreamWorks, and Stacey Snider, CEO, DreamWorks, have also clashed often with Brad Grey, chairman, Paramount, and are expected to leave Paramount later this year when their contracts expire.

According to Reliance sources, Ambani is in talks with Spielberg and the founders of the DreamWorks and is ready to provide $500-600 million that would help Spielberg and Geffen split from Paramount Pictures in a smooth manner and start a new film production company. While Reliance Big Entertainment would hold 50 percent stake in the new company, Spielberg is expected to seek another $500 million in debt financing. The promoters of the new film studio are expected to invest $1.5 billion in the new venture that would produce movies that would be distributed by another Hollywood studio. The contractual arrangements between Spielberg and Viacom allow the former to use the name DreamWorks in case of a split.

This is not the first time, Reliance has reached out to Hollywood's film production houses. Earlier in May, Ambani hobnobbed with top Hollywood stars such as Jim Carrey, Tom Hanks, Brad Pitt, Nicolas Cage and George Clooney and announced that his company would provide financing worth $1 billion to their production houses.

Also in March, Reliance bought a several multiplexes in New York, Los Angeles, Chicago and Washington D C, among other states, giving it 250 screens in 28 North American cities.

The deal with DreamWorks, which entails producing 30 movies across a five-year period, would raise the global profile of Ambani's entertainment arm and allow it to gatecrash into Hollywood's mega-billion dollars entertainment industry. However, it would not give it creative control over DreamWorks, which has an impressive track record of producing big budget box office successes like "Saving Private Ryan," "Dreamgirls," "Transformers," "Gladiator," "Shrek" and the latest hit "Kung Fu Panda."

India's Bollywood is the world's most prolific movie industry with more than 1,000 releases a year. It is estimated at nearly $12.5 billion in the latest study by Ernst & Young but it has not, till recently, begun to formalize its operations under big corporate financiers like Ambani and look abroad.