Reliance to invest in DreamWorks

HONG KONG – India's Reliance ADA Group is in advanced talks to invest more than $500 million in a new venture with DreamWorks Pictures' principals Steven Spielberg and David Geffen. Move would help facilitate DreamWorks exit from Paramount Pictures at the end of the year.

Contacted by Variety on Tuesday, Spielberg offered no comment, but did not deny the rumors that had been circulating in recent days. Rajesh Sawhney, prexy of Reliance Entertainment unit, did not immediately return Variety's calls.

Wednesday editions of the Wall Street Journal said that Reliance would make an equity investment of $500-$600 million and that the new DreamWorks venture would seek an additional $500 million of debt finance.

With David Geffen wanting to slash his involvement in the movie biz, Stacey Snider, the former Universal Pictures topper and current chief executive of Dreamworks, is expected to make the transition with Spielberg.

Reliance Entertainment, currently rebranding itself as Reliance Big Entertainment is the biggest player in India's film industry with interests spanning film labs, exhibition, production and home video. It also comes with A-list financial credentials.

Headed by 49 year old Anil Dhirubhai Ambani, by one recent count the world's sixth wealthiest man, Reliance ADA is one of India's largest and richest conglomerates with interests in energy, telecommunications, financial services and healthcare.

The entertainment unit, which granted iconic financier George Soros a 3% stake for $100 million in February, last month made headlines in Hollywood when it announced film development deals with half a dozen of the biggest stars including George Clooney, Nicolas Cage and Tom Hanks.

Those deals were touted as a low cost, low risk way of entering Hollywood. Deal with the DreamWorks principals is very much larger and more opportunistic.

The strained relationship between Geffen and Spielberg and Viacom's Paramount has been an open secret since Viacom's CEO Philippe Daumon said at a Goldman Sachs confab last September that company was preparing for a future without the duo. The personal contracts that Geffen and Spielberg signed as part of Viacom's 2005 acquisition of DreamWorks expire at the end of 2008.

New DreamWorks venture is understood to be aiming to produce half a dozen live-action movies per year. Distribution of those pictures has not been determined, though it is understood that Spielberg is considering a return to his spiritual home at Universal.

Part of their deal with Viacom would allow Spielberg and Geffen to take with them the DreamWorks name, though they would not be expected to carry over the pictures hatched at the studio while within the Viacom fold.

Aside from the Hollywood talent deals, Reliance also announced in Cannes that it would invest $1 billion in the movie biz over the next 18 months and unveiled a slate of 69 Indian-sourced movies.

Reliance Big Entertainment's other Stateside moves have recently included the assembling of a 220 screen exhibition circuit at 28 locations across the U.S. and the acquisition of DTS' digital imaging unit.

Unit is also India's biggest FM radio owner and in the fall this year will launch a direct-to-home satellite TV platform serving India and South Asia and a bouquet of new channels.

(Peter Bart and Tatiana Siegel also contributed to this report.)