DreamWorks Seals Funding Deal with India's Reliance

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October 6, 2008 5:08 PM

DreamWorks Seals Funding Deal with India's Reliance

Posted by Rachel Breitman

UPDATE: The original post did not include a team of lawyers from Cravath, Swaine & Moore representing Steven Spielberg on the deal Those names have been added in the fifth paragraph below.

The state of domestic funding for Hollywood productions is so bad these days that even blockbuster filmmakers need to be creative in financing their projects. That's what director and producer Steven Spielberg did in signing a $1.45 billion financing deal with India's Reliance Big Entertainment Ltd. on Friday, setting up a new company under the DreamWorks label.

The company will be helmed by Spielberg and DreamWorks CEO Stacey Snider. The deal combines $550 million in equity from Reliance with $750 million in debt financing from J.P.Morgan Chase & Co. An additional $150 million in junior capital will be raised from whichever studio signs on to distribute the company's films.

Under the terms of the deal, Spielberg, who founded DreamWorks Pictures SKG with Jeffrey Katzenberg and David Geffen in 1994, will resign from Paramount Pictures Corporation, which purchased DreamWorks in 2006 for $1.6 billion, but will hold on to the company name. (According to press reports, neither Geffen nor Katzenberg will be part of the new company; Geffen has expressed an interest in retiring from the coming in recent years, and Katzenberg will continue to run the DreamWorks Animation.)

"To facilitate a timely and smooth transition, Paramount has waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company without delay," the movie studio, a subsidiary of Viacom Inc., said in a statement.

Cravath, Swaine & Moore represented Spielberg led by corporate partners Faiza Saeed and Sarkis Jebejian, and tax partners Stephen Gordon and Lauren Angelilli. Harry "Skip" Brittenham, a founding partner at top Hollywood entertainment boutique Ziffren Brittenham Branca Fischer Gilbert-Lurie Stiffelman Cook Johnson Lande & Wolf, brokered the deal on behalf of the new company. Brittenham had advised on the spin-off of DreamWorks Animation SKG, Inc., in 2004 and helped to negotiate the DreamWorks sale to Paramount. Ziffren Brittenham partner Samuel Fischer represented Snider. Brittenham's client list includes "more top studio executives than any other Hollywood lawyer," according to the Los Angeles Times; "Brittenham has factored into virtually every huge deal in Hollywood over the last two decades."

Bruce Ramer, name partner in another of Tinseltown's top entertainment shops, Gang, Tyre, Ramer & Brown, was co-counsel for Spielberg on the deal with help from partners Harold Brown and Tom Camp. Ramer has been Spielberg's personal counsel on several matters, including the acquisition of financing needed to launch DreamWorks in 1994.

Stroock & Stroock & Lavan entertainment practice head Schuyler Moore represented Reliance in the four month negotiations. The company was also advised by the film-consulting division of JPMorgan.

Reliance already had shown a hankering for Hollywood investment by the time this deal materialized. India's biggest entertainment conglomerate, owned by Indian billionaire Anil Dhirubhai Ambani, also announced deals with eight Hollywood production companies, including ones run by Jim Carrey, Brad Pitt, and Tom Hanks, in May at the Cannes Film Festival.

"This strategic partnership between Reliance, Steven [Spielberg], and Stacey [Snider] will be a cornerstone of our 'Hollywood' strategy as we continue to build film production, distribution, and exhibition interests that reach across the globe," Ambani said in a statement. With a market capitalization of more than $50 billion, The Reliance Anil Dhirubhai Ambani Group is one of India's three largest businesses.

Capital from India may help counter the effects of dwindling domestic credit. In July, Paramount announced that a $450 million financing deal with Deutsche Bank had been canceled, as the bank downsized its film financing unit. Merrill Lynch also trimmed their film-financing ventures this year.

"As the wave of American investors recedes, another is coming in," Moore tells The Am Law Daily. "A tidal wave is coming from India, and I think behind them is going to be China. The Indian financiers all speak English and understand Hollywood because they have their own Bollywood."

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