Spielberg's DreamWorks finally lands movie funds

Nearly a year after embarking on plans to relaunch DreamWorks as an independent studio, Steven Spielberg finally has the financial means to greenlight his own movies.

Today, DreamWorks said it had finalized the first phase of a long-in-the-works funding deal that paves the way for the production studio to be fully operational.

The funds, which will enable DreamWorks to make 18 to 20 films over the next three years, include $325 million in bank debt and a matching equity investment of $325 million from Spielberg’s 50% partner, India’s Reliance Big Entertainment. Additionally, as part of DreamWorks’ recent distribution deal with Walt Disney Co., the Burbank studio agreed to lend DreamWorks up to $175 million to bankroll movies.

Although the $825 millon falls far short of the $1.25 billion the director had originally sought, DreamWorks was able to achieve what many in Hollywood have been unable to do: secure new sources of film funding in financially trecherous times.

But independence comes at a steep cost: Spielberg, to raise the money, had to sell a half interest in his new company to Indian investors who want to get a toehold in Hollywood.

DreamWorks plans to produce up to six movies a year, which will be released under Disney’s Touchstone Pictures label. Disney, suffering an uneven run at the box office, hopes to benefit from movies supplied by the famous filmmaker.

Nonetheless, the major beneficiary at the moment is Spielberg and his business partner Stacey Snider, who haven’t been able to bankroll a new movie since their company’s contentious split from Paramount last fall. DreamWorks had hoped to have its financing in place months ago, but efforts to raise the debt portion of the funds were set back by the credit crunch. In all, nine lenders, including lead bank JPMorgan Chase, Bank of America, Wells Fargo, City National Bank and Comerica took part in the deal.  

“I’m thrilled that after 11 months we can finally be a company,” Snider said in an interview. “We got the funding in an environment where credit has been almost impossible to secure.”

Reliance Capital vice chairman Amitabh Jhunjhunwala and JPMorgan's Alan J. Levine, who helped Reliance structure the financing deal are joining Snider and Spielberg on the DreamWorks board of directors.

Snider said the goal would be to eventually raise a second phase of funding if the credit markets improve.
If successful, that would trigger an additional equity investment by Reliance. The Mumbai-based media company, headed by billionaire investor Anil Ambani, orginally said it was prepared to invest as much as $550 million in Spielberg’s new studio.

For now, Snider said she plans to make five to six movies a year, including “one big tent pole” and four to five others. She noted that she and Spielberg retain “complete creative control” over the movies and Reliance has given them “a generous greenlighting cap,” believed to be north of $100 million. During the period when DreamWorks’ bank was struggling to raise funds, Snider operated with limited financial resources as she scrambled to attach actors and filmmakers to movie projects she was stockpiling. During that period, Spielberg and Relianace covered overhead and development costs at DreamWorks, which employs 80 people and is based at Spielberg’s longtime production offices at Universal Studios.

DreamWorks plans to be in production on its first movie this fall. In October, cameras will roll on “Dinner With Schmucks,” a $75-million-budgeted comedy directed by Jay Roach and starring Steve Carrell in which DreamWorks is a partner with Paramount and Spyglass Entertainment.

Up next for Spielberg to direct is a remake of the 1950 Jimmy Stewart movie “Harvey,” which will begin shooting in early 2010. The film, adapted from the Pulitzer Prize-winning play about an eccentric man who befriends a six-foot-tall invisible rabbit, will be financed by 20th Century Fox, which had been developing the project, and DreamWorks.

Among DreamWorks’ priority projects are “The 39 Clues,” based on the children's series about the world’s most powerful family; “Real Steel,” a family movie that Robert Zemeckis is producing with Don Murphy about the relationship between an estranged father and his son who team up on the boxing circuit — where the fighters are robots; “Motorcade,” an action thriller about terrorists attacking the president’s motorcade in Los Angeles; and an adaptation of the comic book “Cowboys and Aliens.”

DreamWorks also has more than a dozen other movies in development that Spielberg bought from Paramount as part of his company’s divorce settlement from the Viacom Inc.-owned studio. Paramount has the option to partner with DreamWorks on those movies as well as any other it greenlights before the end of this year.

Spielberg recently completed directing “Tintin,” a 3-D film based on the classic Belgian comic strip series for Paramount and Sony Pictures, due out in 2011.

--Claudia Eller

Photo: DreamWorks partners Stacey Snider and Steven Spielberg. Credit: Business Wire

Comments

[August]

Oh No! Their first & second flicks are already complete box office FLOPS!

[JAKE]

Hopefully this deal paves the way for a new Jaws chapter done as a bollywood musical. Singing. Dancing. Shark attacks.
I'm there.

[Jack Meoph]

Don't mean to sound negative (but it is), but none, I mean absolutely none, of those projects sounds even remotely interesting. But what do I know, I just buy the tickets. Honestly, redoing movies and ideas that were successful in the past does not in anyway guarantee success in the present. Hollywood continues to do the same dance while people are walking out of the building. They may have higher revenue from the year before, but I can tell you it's not because the movies are better, far from it, it's because they're charging more for people to walk into the theaters. Until the braintrust that runs Hollyweird starts charging on a scale (bad movies cheap, good movies more and this could also apply to DVD's) I'm not going to waste my money, time, and effort to go to a theater, pay stupid prices for snacks (I don't do this anyways...PICNIC!), and sit around with a bunch of mouth breathers, watching a rehashed movie on a system that isn't even as good as what I have at home. Going to the movies have dropped so far down my entertainment list, they're not even in the top 10 anymore. The same themes, the same actors, the same movies over and over. Not to say there isn't some astounding entertainment out there, it's just so rare. I've been to two movies so far this summer........and both were popular, high earners, yet left me feeling ripped off.

[CubanRick]

Way to go Steven! Job security, thats for sure...
Go Deluxe!!!

[Greg Agalsoff]

Spielberg & Snider could also consider a financing option from the IATSE and its members, who rely directly upon industry producers for their income.

[thom]

I think spielberg has finally done it -- actually underestimated American intelligence. Because I bet that "“Dinner With Schmucks,” a $75-million-budgeted comedy directed by Jay Roach and starring Steve Carrell" will lose 37.5 million.

[Tangela Mingo]

Thank You! It's about time the investors started realizing that writers are the motivators of the world. You are a great influence to many of us. I hope the book that I am
working on will some day sit upon your desk to be read by your eyes at Dream Works.
The public will always support your endeavors!

I remember having to read "The Color Purple" when studying at The City University of New York @ City College, and when the movie aired across the nation it was so controversial. We all love the book even more. It is now a favorite and a classic. If you had not taken the time to invest in developing that movie there would be no interest in that area of thought. We..., the public owe you all the support thats needed.
Tangela Mingo, Economist/Writer

[Gordon F. Terry]

Steven Spiellberg (I don't know if you take requests) can you please produce remakes of Fritz Lang's Metropolis in 3-D and Paul Wegener's Der Golem for Dreamworks, please?
I need some interesting movies to look forward to.

http://en.wikipedia.org/wiki/The_Golem_(1915_film)

http://en.wikipedia.org/wiki/Metropolis_(film)

[mary]

Perhaps business does only see green, When it comes to moeny ethnicity does nor matter, Green is the color of peace!

[Pearl]

Spielberg sold out to India? So now Hollywood becomes Bollyberg? SHAMEFUL! A pox on you, Speilberg!

[Justin Kase]

I happen to like Mr. Spielberg's movies and the choices he makes. I hope he leans towards some adult films also. I read a book once called "The Day the Music Died," and I always thought it would make a wonderful film with Spielberg's hand involved. Don't know who wrote the book, but it was a great look at how the industry changed with the invasion of rock. Anyone ever heard of it?

Will the new DreamWorks make adult movies or try to stick to the popular films to establish themselves?

[jeff]

Like he needed any more money!