Hollywood's Spielberg Express is officially leaving the station. The superstar director has signed a $1.2 billion deal with India's largest entertainment company, Mumbai-based Reliance ADA Group, to launch his own filmmaking company by the end of the year, sources confirm.
The deal allows Spielberg to end a contentious three-year relationship with Viacom's Paramount studio, which in late 2005 acquired the DreamWorks live-action studio for $1.2 billion.
Spielberg's new production unit is expected to produce about six films a year, with the first at least a year away. Under their arrangement, first reported by BusinessWeek in early September, Reliance will invest $500 million in equity for a 50% stake and has helped arrange another $700 million in debt through its longtime bankers, JPMorgan Chase.
Now, the speculation begins as to where Spielberg, who will leave along with his top lieutenant, DreamWorks CEO Stacey Snider, will set up his company.
The betting is that Spielberg will return to General Electric's Universal Studios, which has a long track record of distributing films like the director's Jaws, Jurassic Park, and E.T. the Extra Terrestrial, and where Spielberg has long maintained his offices.
Also considered to be in the running is News Corp.'s Fox studios, which has distributed several of Spielberg's other films and where the director has a strong working relationship. DreamWorks declined to comment.
Released by Paramount
A long shot might be his return to Paramount, which issued a statement that congratulates the DreamWorks team and "wish(es) them well as they start their newest venture." (DreamWorks Animation, a separate company in which Spielberg also owns a stake, is a publicly traded company whose films are distributed by Paramount.)
Paramount also said that it was releasing Spielberg, Snider, and others from "certain provisions" in their original agreement so that they could leave immediately, rather than Oct. 31, when their deal was to officially end.
Paramount is said to have secured a commitment from Spielberg to talk about a new deal that would allow Spielberg to operate as an independent company, with Paramount distributing his films. But sources say that's an unlikely arrangement. Paramount declined to comment on the likelihood it would arrive at a new deal with Spielberg.
The studio says it "expects to continue our successful collaboration" with Spielberg, and is already in the midst of producing a second installment of the blockbuster action film Transformers, which Spielberg produced.
Paramount retains rights to other projects that Spielberg brought to it during their three-year arrangement, say sources, with the director likely to stay on as a producer for most of them. Spielberg is expected to conclude a deal within the next two months with the studio he anticipates joining, say sources with knowledge of his dealmaking.
