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June 19, 2008

DreamWorks Keeps Movin'

The latest news that DreamWorks is close to a deal with the Indian media and entertainment conglomerate, Reliance ADA, to raise $500 to $600 million in production financing makes sense. It was a logical move in the wake of Universal's position in negotiations last year that it would distribute, but not fully finance, the mini-studio. Late last year, David Geffen seemed confident that he could find a way out of an acrimonious relationship with Paramount by turning back to NBC-Universal, which he seemed to believe would ultimately see the logic of bringing DreamWorks back into the fold. And he was trying to dangle rival deals with Warner and Fox to press that outcome. But as I reported in November, Universal wasn't interested in taking on the threesome as a fully financed entity. Too expensive. Too much overhead. Too many moguls. Instead, Universal wanted DreamWorks to find outside financing. This, it seems, is what has happened. I reported in November that DreamWorks was seeking $600- $700 million in financing from a major, a step up from the $400 million in the Paramount deal. The reports this week put the Reliance investment at just between those two sums. 

As for distribution, that's another matter. At the time, Universal was interested in a distribution deal with DreamWorks. If the deal with Reliance goes through, that seems a logical scenario. It is the studio that has long been the preferred home to Steven Spielberg. See Variety's story today for an interesting backgrounder on Reliance, a behemoth that has a pair of feuding brothers in the background.


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