The principals behind DreamWorks SKG on Friday signed a long-expected deal with Reliance ADA Group of India to start a new $1.2 billion film company, allowing the studio co-founded by director Steven Spielberg to part ways with Paramount Pictures.
The Hollywood-Bollywood linkup of DreamWorks and the Mumbai-based entertainment, financial and telecommunications giant caps two years of speculation and feuding between Spielberg and his DreamWorks co-founder David Geffen with executives from Paramount and its corporate parent, Viacom Inc. DreamWorks had no immediate comment on formation of the new film company, which two sources close to the deal valued at $1.2 billion.
The transaction was confirmed in a statement by Paramount, saying it had waived "certain provisions" from its original deal with DreamWorks "to clear the way for the DreamWorks principals and their employees to join their new company without delay."
Under the deal, as reported by The Wall Street Journal, Reliance will invest about $500 million in equity, while J.P. Morgan Chase & Co will provide $700 million in debt toward the new venture. The basics of the pact first came to light in June, but the fine points of the agreement have been under negotiation until this week, sources told Reuters. With the deal completed, it is expected the DreamWorks principals will turn their attention to finding a partner to distribute roughly six DreamWorks films a year.