Spielberg expected to dig into own pockets to buy DreamWorks projects from Paramount
Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.
But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.
Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.
In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.
Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.
More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.
Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.
Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.
Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.
Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.
“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”
-- Claudia Eller