Print

Please post once and this message will disappear! Introduce yourself, say hello, jump into a discussion...

[LosingNow]

Lakshmi!!!!!

---
PAGE ONE 

Spielberg, India Firm Near
Deal to Ally With DreamWorks
By LAUREN A.E. SCHUKER and MERISSA MARR
June 18, 2008; Page A1

The principals of DreamWorks SKG are close to a deal with one of India's biggest entertainment conglomerates to form a new movie venture, according to people familiar with the situation, a move that would give director Steven Spielberg the cash to finance his DreamWorks team's departure from Viacom Inc.'s Paramount Pictures later this year.

--
Movie moguls Jeffrey Katzenberg, left, and Steven Spielberg watch the NBA finals last week. Mr. Spielberg's DreamWorks SKG is in talks with Reliance, a move that would give the director the cash to regain his independence.
--

Mumbai-based Reliance ADA Group would provide Mr. Spielberg and company with $500 million to $600 million in equity, moving them one step closer to ending one of Hollywood's most contentious and closely watched battles. In Reliance, the DreamWorks team also would have an unusual and ambitious partner in the film business: an Indian firm with interests in telecommunications, financial services and entertainment that wants to build a media empire by financing Hollywood pictures.

The deal amounts to a marriage of some of the biggest names in the Hollywood and Indian business worlds, with Reliance getting a large stake in the new company. DreamWorks, which makes live-action films that have included last year's "Blades of Glory" and "Dreamgirls" in 2006, would likely seek another $500 million or so in debt financing elsewhere to give its new venture enough money to make a slate of about six films a year. The company would then choose a studio to distribute the films, which is still an open question. General Electric Co.'s Universal Pictures, where Mr. Spielberg began his career, is thought to be the director's preference to release his future works, but News Corp.'s Twentieth Century Fox also is thought to be a serious contender. (News Corp. is the owner of Dow Jones & Co., publisher of The Wall Street Journal.)

A spokesman for DreamWorks declined to comment.

The film industry has been closely monitoring the fate of the 61-year-old Mr. Spielberg and partner David Geffen, co-founders of DreamWorks SKG. DreamWorks was sold to Viacom in 2006 after a decade-plus run as a private company. But a tense relationship soon developed between DreamWorks and Paramount, and last year DreamWorks began to signal publicly that they might leave the studio in 2008, when the contracts of Messrs. Spielberg and Geffen allow it. Another provision of their complex arrangement will likely allow them to keep using the DreamWorks SKG name, though Viacom would retain rights to the films they created during their short time at Paramount.

The fractured relations reached a boiling point last fall when, threatened by rumors that Mr. Spielberg might bolt, Viacom Chief Executive Philippe Dauman said that any such departure would be "completely immaterial" to the company's financial future. Mr. Dauman and executives at Paramount have since then scrambled to repair relations with Messrs. Spielberg and Geffen, to no avail.

When the dust settles, Mr. Spielberg is expected to be joined in the venture by current DreamWorks Chief Executive Stacey Snider, who has become a key ally and collaborator since joining Mr. Spielberg in 2006. The former head of Universal Pictures, Ms. Snider would give Reliance a tested Hollywood manager for its biggest foray into the global movie business.

Although the DreamWorks team's possible partnership with Reliance ADA Group seems like an unlikely meeting of the minds, it's actually in line with Hollywood's current landscape, where a dearth of Wall Street financing has opened up the door to foreign investors.

Reliance's entertainment division, Reliance Big Entertainment, already announced a slate of investments in Hollywood projects last month at the Cannes Film Festival. Those include providing financing to a handful of Hollywood top talent with production houses, like Jim Carrey, George Clooney, Tom Hanks and Brad Pitt. The company also said then it would spend more than $1 billion over the next 18 months building its entertainment empire in India and abroad.

Reliance would provide funding to allow talent like Messrs. Clooney and Pitt who have their own production houses to acquire film projects before taking them to major studios with which they have previous agreements. Reliance could then go into business with the Hollywood studios, as a partner financing up to 50% of the film's production. These agreements are commonly referred to as "development silos."


Leading the Charge

Rajesh Sawhney, president of Reliance Big Entertainment, is leading the charge into Hollywood. Before joining Reliance, Mr. Sawhney was chief operating officer at Times Internet Ltd., part of the Times Group, one of India's largest media and entertainment companies.

Reliance's plunge into Hollywood is part of a broader push among India's corporate titans to take their place on the global corporate stage. The country has now produced global players in software, steel, autos and is building a growing powerhouse in telecommunications.

India's rise was at first confined to software and outsourcing. But more recently, Indian firms, spurred by rapid growth in their home market, have expanded abroad aggressively. In some cases, they have scooped up storied Western brands. Earlier this year, for instance, Tata Motors Ltd., part of the Tata group of companies, agreed to buy Britain's Jaguar and Land Rover brands from Ford Motor Co. for $2.3 billion.

In recent years, the country's Mumbai-based film industry, known as Bollywood, has found a growing global appeal for its products. As it has expanded, it has drawn investment from Hollywood as well. For example, Walt Disney Co. has a large stake in UTV Software Communications, one of India's leading production houses. Other large American media firms have also invested in the Indian market.

In the Reliance parent company, the DreamWorks team will find another internal feud -- among the Ambani family owners, one of India's most prominent industrial dynasties. Anil Ambani, 49, controls Reliance Communications Ltd., one of the major mobile players in India. He has pushed to become a major player in the country's media world, is married to a former Bollywood actress and is eager to make the leap to Hollywood. He and his older brother Mukesh are currently engaged in a feud over a multibillion-dollar telecommunications deal with MTN Group Ltd. of South Africa. Mukesh Ambani's company, Reliance Industries Ltd., has sought to assert that it has the right of first refusal over Reliance Communications in the event of a sale.

In leaving Paramount, Messrs. Geffen and Spielberg will put behind them a painful period in their storied careers. The duo have made clear for the past year that they are eager to part ways with Paramount after a series of personal clashes with executives at the studio and its Viacom parent. In an interview last September, Mr. Geffen said: "We want to function independently and get credit for our successes and failures."

 
DreamWorks was founded with great fanfare in 1994 by Mr. Spielberg, Jeffrey Katzenberg and Mr. Geffen, who set out to build a vast multimedia enterprise. The trio, who form the SKG of the logo, found that success was not easy to come by, however. While they scored hits such as "Saving Private Ryan," they also made flops such as "The Island" and fared poorly in side businesses such as music.

In 2004, DreamWorks spun off the animation arm that Mr. Katzenberg was running into a stand-alone public company. DreamWorks Animation SKG, which also distributes its films through Paramount in a deal that runs for several more years, is the creator of hits like "Shrek" and "Kung Fu Panda."

Bidding War

The live-action arm of DreamWorks became the object of a fierce bidding war in 2005, with Viacom scooping up the studio and its venerable founders from under the nose of GE's NBC Universal. Viacom paid $1.6 billion -- at the time a healthy price for an 11-year-old studio with mixed returns.

The honeymoon period was brief, however. Not long after the deal was consummated, Messrs. Spielberg and Geffen were struggling with their loss of independence. They railed against their new master: Paramount chief Brad Grey. Mr. Spielberg privately complained about Paramount taking credit for DreamWorks movies. They also felt they were not being afforded the appropriate level of respect from Mr. Grey and his Viacom bosses.

Tensions between the two sides came to a head at the end of 2006 over "Dreamgirls." Mr. Geffen, who became a billionaire through the music industry, was heavily invested in the musical, having shepherded it from the stage to the big screen. He took enormous offense because he felt Mr. Grey seemed to take credit for the movie at several public events, according to people familiar with the situation.

Perhaps sensing that the DreamWorks camp was heading for the door, Viacom Chief Mr. Dauman dropped a bombshell last September. He told an investor conference that their departure would be "completely immaterial" to Viacom. While Paramount and DreamWorks are both small elements of Viacom's bottom line, the comment infuriated the DreamWorks team. Publicly defending Mr. Spielberg, fellow DreamWorks founder Mr. Katzenberg said: "To suggest that not having Steven Spielberg is completely immaterial just seems ill-advised." He added: "I think calmer heads need to prevail here."

Mr. Katzenberg finds himself in an awkward situation with the departure of his longtime colleagues. As part of the sale to Paramount, the studio landed a distribution deal with DreamWorks Animation. He and the animation company will be left behind at Paramount when Messrs. Geffen and Spielberg depart.

For Viacom and its Paramount studio, the departure of the DreamWorks camp will create a hole in its slate. But it will also remove a distraction that has taken up a lot of executives' time. Paramount is emerging from its revamp and finally has some hits to its name, including this summer's "Iron Man." A key advocate for the DreamWorks deal originally, Mr. Grey has taken the brunt of attacks from the DreamWorks crew, according to people familiar with the situation.

Still, Paramount may remain in business with DreamWorks for some time to come. The two share the rights to scores of projects, such as a sequel to last year's hit "Transformers," though people close to the situation say Mr. Spielberg's crew may bargain with Paramount to take certain projects with them. Aware of this, Mr. Dauman has made a special effort in recent months to smooth things with Mr. Spielberg, visiting him regularly in Los Angeles.

Write to Lauren A.E. Schuker at lauren.schuker@wsj.com and Merissa Marr at merissa.marr@wsj.com

[keep-it-cool]

WN, do you remember that thread where we were talking about ownership of assets ... like I said there, non US citizens (corporate or others) will own a large proportion of US assets over time ... it has already started with ADIA & other Asian investors taking stake in Citi and other banks, Tatas buying out Jaguar ... and now this ... a trend is developing, boss ...

you should probably be based here and looking outward ...

[LosingNow]

WN, do you remember that thread where we were talking about ownership of assets ... like I said there, non US citizens (corporate or others) will own a large proportion of US assets over time ... it has already started with ADIA & other Asian investors taking stake in Citi and other banks, Tatas buying out Jaguar ... and now this ... a trend is developing, boss ...

you should probably be based here and looking outward ...

why do you think i am here for the last 2 weeks

I think the trend of non-US citizens owning assets started many years ago and as mentioned by you got "dramatically noticed" when the Asian / Sovereign investors started bailing out the banks.

IMO, this is good.. I think the first half of this century will be called the "globalization period" in world history... and different countries will bring different skills/capabilities to the world market.. US - innovation (more like systems that enable dramatic innovation), China - cheap labor in the early years and mass manufacturing skills in a sustained manner, India - people ..to begin with cheap but as time passes smarter ones.. leading to  strengths in services and specialized/high knowledge content manufacturing.

I think the capital flow reversal ("from US" to "to US") that we are observing is a transient thing..and is perhaps correcting historical dominance of US in that area. Money follows goods & services.. i.e. skills and capabilities.
 
Exciting times ahead indeed.

[LosingNow]

..and the coverage continues for second day
--
Bollywood Dreams Benefit Both Parties
Deal for DreamWorks,
A New Market Awaits;
Passport for India Stars

By ERIC BELLMAN in Mumbai and LAUREN A.E. SCHUKER in Los Angeles
June 19, 2008; Page B9

Hollywood gave Bollywood its name. Now, Bollywood is giving Hollywood its money.

The potential deal between Indian billionaire Anil Ambani and Steven Spielberg's DreamWorks SKG is the latest sign of a growing closeness between two of the world's biggest movie-making industries that promises to transform both.

The principals of DreamWorks are negotiating a deal with Reliance Big Entertainment to form a new movie-making company, The Wall Street Journal reported Wednesday. Reliance Big Entertainment, part of the Reliance ADA Group, would put up between $500 million and $600 million to back Mr. Spielberg and his team at DreamWorks as they leave Viacom Inc.'s Paramount Pictures later this year, according to people familiar with the situation.

For Hollywood, India promises a new and deep source of funding as Bollywood -- fueled by strong economic growth and a massive moviegoing population -- throws off money. Hollywood also could gain greater access to one of the few major movie markets it has yet to crack. In the past year, Walt Disney Co., Sony Corp.'s Sony Pictures, Viacom and Time Warner Inc.'s Warner Brothers all have boosted their investments in Indian media or film-production companies.

For Bollywood, a significant presence in Los Angeles would fulfill years of ambition to extend beyond India and its neighbors and crack the highest echelons of global filmmaking. Indian movie makers also are looking to import Hollywood's higher production values and a Hollywood-style studio film-development system that Bollywood traditionally has lacked.

But the history of outside investors, including foreign companies, trying to hit Hollywood pay dirt is long, with few standout successes. The 1980s saw a flood of Japanese investors, followed in the 1990s by Germans.

Foreign financiers are one set of investors who have knocked on Hollywood's door for years, trying to make money by financing films -- a nearly impossible task. "Frankly, most movie deals don't make a lot of financial sense because while some films make money, most films either break even or lose money," said Mark Litwak, an attorney who works on film financing.

More recently, hedge funds and private-equity firms have invested heavily in Hollywood -- but the pace has started to slow. That has prompted some in Hollywood to look east for new sources of financing.

"There has definitely been a slowdown in the last year since the subprime crisis," said John Burke, an attorney who represents film investors. "We have certainly seen an increase in international players taking a look at entertainment assets." He mentioned Chinese and Russian companies as potential future partners for Hollywood projects.

Reliance Big Entertainment may stand a better chance of lasting in Hollywood because it already has been expanding in other entertainment areas in India and the U.S., such as the multiplex business. But its ambitions could set up a potential clash with its future partners.

Traditionally, Hollywood has seen foreign investors as simply a source of capital. Reliance Big Entertainment, however, has bigger aspirations that might collide with those of Hollywood moguls.

The company's president, Rajesh Sawhney, says Reliance Big Entertainment intends to do more than simply open its wallet to Hollywood. "We are not looking to be just a financial investor; our aspiration is to be a strategic partner," he said. "We want to create a brand-new ecosystem and add value as the relative importance of emerging markets is changing the dynamics of the entertainment economy."

"Any company with global ambitions needs a home-market advantage, and it also needs to have a Hollywood strategy," Mr. Sawhney added, though he declined to comment on the discussions between Reliance and DreamWorks.

 
Reliance Big Entertainment said last month that it would finance movies by production houses connected to Jim Carrey, Tom Hanks, Brad Pitt and others. It also said it plans to spend more than $1 billion in the next 18 months to expand its entertainment empire.

Others in Bollywood are following Reliance Big Entertainment's example, albeit on a smaller scale. Current U.S. box-office movie "The Happening," for instance, was co-financed by India's UTV Motion Pictures. It also co-produced two other movies with wide U.S. release: "The Namesake," directed by Mira Nair, and "I Think I Love My Wife," starring Chris Rock. UTV Motion Pictures is part of Indian media conglomerate UTV Software Communications Ltd., in which Disney owns a 32% stake.

UTV says it has made money on each of its Hollywood films. It still sees its main business as Hindi films. But backing films in the U.S. has diversified its revenue and provided lessons on how to market movies that it now is applying at home.

"Indians don't have to look to the West for heroes or pop culture," Siddharth Roy Kapur, chief executive officer of UTV Motion Pictures, said in a recent interview. "Still, we have been able to learn a lot about the way the studio model works in the West."

Revenue in India's film industry totaled $2.5 billion last year, less than one-tenth the total made by Hollywood films, according to PricewaterhouseCoopers. But film revenue in India has been growing at about 17% a year for the past three years, while growth in the U.S. has been less than 3%. Emerging markets in general have outpaced the U.S. and most other developed markets: Annual movie revenues have climbed more than 6% in the Asia-Pacific region and Latin America in the same period.

Hollywood and Bollywood are slowly starting to share their stars, too. The queen of Indian cinema, Aishwarya Rai-Bachchan, has appeared in a few Western films. One Indian film company recently announced that Sylvester Stallone will make a cameo in its next movie. Bollywood also sees an increasing market for its song-and-dance numbers overseas that closer links with Hollywood could foster.

--Tariq Engineer in Mumbai contributed to this article.

Write to Eric Bellman at eric.bellman@wsj.com