Spielberg's DreamWorks finally lands movie funds
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.
Photo: DreamWorks partners Stacey Snider and Steven Spielberg. Credit: Business Wire