Reliance ADA Group of India is close to investing between $500 to $600 Million in Dreamworks SKG, about half the amount Steven Spielberg is looking for to release himself and the company from Paramount Pictures (NYSE:VIA-B).
Since the acquisition of Dreamworks by Viacom for $1.6 billion, the relationship between the two entities has been stormy to say the least.
Much of the battle is the typical tension between creative types like Spielberg, who don't like to think in terms of fiscal responsibility, and those holding the purse strings who want to ensure their money is being well spent. People like Spielberg don't like to be told to do their projects within budget.
But since the celebrated launch of Dreamworks SKG, it has struggled off and on to be successful; both financially and critically. They've produced some big hits and experienced some huge failures as well.
Things have gotten so hot that Viacom CEO Philippe Dauman said it would be "completely immaterial" if Spielberg were to leave when the contract allowed him to.
Co-founder of DreamWorks, Jeffrey Katzenberg defended Spielberg at the time saying, "To suggest that not having Steven Spielberg is completely immaterial just seems ill-advised."
While from an iconic and marketing view that may be true, but at the same time, like all those in Hollywood, Spielberg has a spotty record which is sometimes ignored because of other great successes. From a financial way of looking at it, Dauman is probably right, from a marketing way of looking at it, he's probably wrong.
Spielberg has been noted for being thin-skinned in the past, and his ego doesn't like it when he doesn't get his way. That, to me, is part of the problem related to the ups and downs of his success and failures.
If he thinks that'll change with Reliance, he will be in for a surprise, as that company also has inner battles going on between the Ambani brothers, and that will probably have an impact on Spielberg and DreamWorks in the future.
For Reliance ADA Group, they're looking to expand their entertainment offerings to become a global entertainment powerhouse, and are hoping DreamWorks and the Spielberg persona will help them take that next step successfully.
Even with the deal, DreamWorks will need to score another approximate $500 million to get the capital needed to do what it wants to do.
In the usual complexity of contracts in Hollywood, even if DreamWorks and Spielberg leave the Viacom camp, there is a lot of entangling residue left over that won't make it a complete break. Things like distribution deals with DreamWorks Animation (NYSE:DWA), a separate publicly owned company run by Jeffrey Katzenberg, as well as dual rights shared by the two companies which will probably go on for some time, although some of them may be negotiated over if Spielberg and DreamWorks departs the Paramount fold.
Whatever happens, because of the iconic nature of Steven Spielberg, and things being run by the creatives rather than accountants at DreamWorks, we'll probably see similar problems continue on with whoever partners with him.
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