By Ramola Talwar Badam, Associated Press MUMBAI, India — India’s Reliance Entertainment and other investors are in talks with Hollywood’s DreamWorks SKG to raise up to $2 billion to create a movie venture, two population familiar with negotiations said Tuesday.
Dreamworks, the movie studio founded in 1994 by Hollywood moguls Steven Spielberg, David Geffen and Jeffrey Katzenberg, is looking to raise a total of $2 billion from investors — $1 billion in equity and another $1 billion for new movie projects, the two people through knowledge of the talks told The Associated Press. They said they could not be named because negotiations were ongoing.
There are four to five other parties involved in the talks, including Universal Pictures, one of the individuals related. It will be some time before the deal is signed, he said, without elaborating.
Reliance Entertainment, part of one of India’s top conglomerates, the Reliance ADA Group, plans to invest more than $500 million to $600 million in equity, that same person said. The Wall Street Journal reported last week that Reliance was considering an investment of not far from that size in a deal with Dreamworks.
The Los Angeles Times had reported last week that DreamWorks is trying to raise money to break from Viacom Inc. (VIA) and its movie workshop, Paramount.
Viacom bought DreamWorks SKG in 2006 for $1.6 billion, but the relationship has declined despite hits such as “Transformers” and “Dreamgirls.” Viacom CEO Philippe Dauman said last year his company was planning for Spielberg’s possible departure following reports that the Academy Award-winning director was unhappy at Paramount.
Meanwhile, India’s movie industry — often called Bollywood — has expanded as several extrinsic studios such viewed like Sony Corp., Viacom and Walt Disney Co. have signed co-production deals with Indian movie houses over the finally two years.
A deal with Dreamworks would help realize the global ambitions of the Reliance group’s chairman, Anil Ambani, one of the world’s richest men. The conglomerate has interests in everything from power generation to financial services. It is currently in negotiations to buy MTN Group, South Africa’s largest mobile phone network operator.
“It’s powerful mix: a top Indian business house with one of the world’s finest filmmakers,” said Neeraj Roy, managing director of Hungama Mobile, a leading digital entertainment company, referring to Spielberg. “It makes imminent sense for Hollywood to collaborate through Bollywood for there is capital available in India.”
Reliance Entertainment spearheads the pudding-stone’s thrust into the media and entertainment business.
The company has 100 films in production and development in India. In addition to this, during the Cannes Film Festival last month Reliance Big Entertainment announced it would provide about $1 billion to develop and co-produce movies with top Hollywood stars George Clooney, Brad Pitt, Nicholas Cage, Tom Hanks and filmmakers Chris Columbus’ 1492 Pictures.
Reliance Big Entertainment, which is part of Reliance Entertainment, is involved in strategy and striking collaborations between segments such as gaming, movies, online, animation and music.
Last month, Reliance pregnant Entertainment cut a co-financing and exhibition deal with 1492 Pictures, the production company responsible for three of the “Harry Potter” movies, which grossed $829 million at the U.S. box office.
Billionaire financier George Soros bought 3% of Reliance Big Entertainment for $100 million in February in a sign of growing interest in Indian entertainment companies.
The potential venture with Dreamworks has stirred interest within the Indian industry, with filmmakers believing the deal could help India learn how Hollywood does business.
“In the initial phase, this would hinder Reliance work out how Hollywood operates, get a sense of how it works there, and then use that to become a major player abroad,” said movie director Feroz Abbas Khan whose film on peace leader Mahatma Gandhi last year won praise in overseas film festivals. “This will broaden the base of Indian cinema.”
Siddharth Dasgupta, former head of the entertainment division at trade body Federation of Indian Chambers of Commerce and Industry, said a Dreamworks investment would be smart for Reliance since big Hollywood names mitigated any risk of investing overseas in the movie office.
“There is always a risk in the movie business, but when you invest in names like Clooney and Spielberg you are hedging your investing.,” he reported. “The upside could also be huge,” he said.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. To report corrections and clarifications, contact Reader Editor Brent Jones. For publication consideration in the newspaper, send comments to letters@usatoday.com. Include name, phone number, city and state for verification.