Spielberg and Ambani deal could change the face of Indian film industry

After months of negotiations, Anil Ambani's Reliance Entertainment of India and DreamWorks SKG, promoted by legendary film-maker Steven Spielberg, are about to clinch a deal to set up a new film company, according to various media reports. The deal will allow Spielberg and others to split from Viacom Inc.'s Paramount Pictures as they need about US$1.7 billion for the new cinema outfit. Reliance Entertainment, according to reports, will invest $500 million to $600 million in the new company. Rest of the money will come from other financial institutions. Pervaiz Alam looks at the key players and changing face of India's film industry.

The deal is seen as a win-win situation for both the parties. DreamWorks, after an internal feud over its direction and financial problems, will have access to money that it desperately needs to become independent again at a time when there's a financial crunch in the US markets.

India's Global Ambitions

Observers in Mumbai say the deal between DreamWorks and Reliance will further boost the morale of the Indian film industry which has seen a surge of foreign investment during the last two years. Indian film industry will gain huge international exposure as well as prestige by working with an icon of Hollywood- Spielberg. As Indian companies go abroad and buy iconic institutions such as Arcelor Steel, Tetley Tea and Jaguar cars, it's obvious that India's film industry too will have global ambitions. Anil Ambani and Spielberg can provide the impetus by coming together.

Watch Pervaiz Alam's Interview on this subject on Murdoch's Fox Business TV b'cast 12 August 2008

Brad Pit, Nicolas Cage, Tom Hanks and George Clooney will work with Reliance EntertainmentFilm-making in India will multiply manifold in the coming months and years. India's media and entertainment industry is one of the fastest growing industries in the world, according to a study by PricewaterhouseCoopers, the world's largest accounting firm. Its revenues will reach $22.5 billion by 2011, says the study.

Three Indian Film companies are listed at the Alternative Investment Market of the LSE in London. And, they - Eros, UTV, TV18's IFC- are doing very well. Others have production agreements with Fox, Viacom, Walt Disney and Sony Corp. Individual Hollywood stars such as Will Smith, George Clooney and Brad Pit are also signed up to make co-productions with Indian film companies.

Corporate savvy institutions in Mumbai welcome the deal. They hope the Indian film industry will benefit from the world's most powerful, professional and popular film institution- Hollywood. Better working conditions and free flow of professional expertise will enrich the final product of the Indian film industry- known for making the largest number of films, about 1000, in the world, but, at the same time, it lacks in offering world class cinema to non-South Asian audiences. Iran, South Korea and Malaysia are doing better than India in this genre. Not a single Indian film has featured in a competitive category of a major film festival such as Cannes and Venice during the last three years. This could change in the near future.

In February, billionaire financier George Soros bought three per cent of Reliance Big Entertainment for $100 million.

DreamWorks

Hollywood moguls Spielberg, Geffen and Jeffrey Katzenberg founded DreamWorks SKG in 1994. DreamWorks partners sold the studio to Viacom for $1.6 billion in 2006. And then a rift developed between Spielberg and Viacom.

Viacom's Paramount Pictures crossed the billion-dollar mark in both international and domestic box office sales in record time this year, making it the first studio to reach these milestones in 2008. This is the second year that Paramount reached the billion-dollar threshold before any other studio.

"In the Filmed Entertainment segment, Paramount has enjoyed terrific theatrical success so far this year. For the second year in a row, it generated more than $1 billion in box office both domestically and internationally in record time. The studio also holds the number 1 spot in domestic market share. Iron Man, Indiana Jones and the Kingdom of the Crystal Skull and DreamWorks Animation’s Kung Fu Panda were all huge box office successes this quarter," said Philippe Dauman, President and Chief Executive Officer of Viacom Inc. Dauman also said last month that the split might save the company some costs. "Clearly there would be ... some savings in our overhead as well as our marketing, distribution and development spend," he said

Viacom Inc.

As of December 31, 2005, the company now known as Viacom Inc. was spun off from its parent, now known as CBS Corporation (and previously known as Viacom Inc.), pursuant to an agreement and plan of merger by which the corporation formerly known as Viacom Inc. was separated into two publicly traded companies: Viacom Inc. and CBS Corporation.

Reliance announced $1 billion dollars for international film deals in Cannes

On May 19, 2008, India-EU Film Initiative reported: India's Reliance Entertainment is on its biggest ever spending spree. After reserving US$ 1billion for making movies, mostly with Indian filmmakers, it has now gone a step further as it announced Sunday it had signed deals with the production houses of top Hollywood stars such as Brad Pitt, Tom Hanks and George Clooney to make films worth about a billion dollars.

The media group has signed separate deals with the production firms of Hollywood stars Nicolas Cage, Jim Carrey, George Clooney, Tom Hanks and Brad Pitt and filmmakers Chris Columbus and Jay Roach, Reliance Entertainment said in a statement.

"With this deal, we hope to develop up to 30 scripts, of which hopefully, 10 will go into production," Reliance Big Entertainment's chairman Amit Khanna told AFP by phone from Cannes in France, where the firm made the announcement.

"The value of this slate of films will be worth a billion dollars," Khanna said. The films will be made in the next two years under different genres and will have a range of budgets, Khanna said.

"We will be dealing directly with top talent," he said, adding the agreements would take India to the forefront of global entertainment.

The company said in a statement: "They are part of (our) long-term strategy for media investments in Hollywood... to build a fully integrated movie company with substantial holdings in production, distribution and exhibition."

Just two days ago, Reliance Entertainment made it known in Cannes, Friday, that it was going to own India's biggest and most ambitious Entertainment company. The company executives confirmed in front of world media that Reliance Big Entertainment Limited would spend a whopping US$ 1 billion on making movies, including some with Hollywood's top stars.

"India is uniquely positioned in the global economic order. We believe this is the right time to make this commitment of $1 billion for the film entertainment business," said Amit Khanna, chairman of Reliance Entertainment.

Last Friday, it announced 69 films in nine languages, with budgets ranging from $1 million to $40 million, would be ready for distribution over the next 18 months. Over a dozen films will be released this year.

What's Reliance ADA Group?

The Reliance ADA group comprises Reliance Capital Limited, Reliance Communications Limited, Reliance Energy Limited, Reliance Health, Reliance Entertainment and Reliance Power.

Reliance Entertainment consists of seven entities: Zapak (casual gaming portal), Big Adda (social networking site), recently in the news for Actor Amitabh Bachchan's blog, Big Flicks (Movie streaming and rental), Jump Games (Mobile gaming), Anirights (Animation), BIG Music, and BIG Movies.

The Reliance – Anil Dhirubhai Ambani Group is among India’s top three private sector business houses on all major financial parameters, with a market capitalisation of Rs.325,000 crores (US$ 81 billion), net assets in excess of Rs.115,000 crores (US$ 29 billion), and net worth to the tune of Rs.55,000 crores (US$ 14 billion), according to the group.