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.
DreamWorks said Monday that it had finalized the first phase of a long-in-the-works funding deal that paves the way for the production company 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 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 as much as $175 million to bankroll movies.
Although the $825-million total falls short of the $1.25 billion the director had originally sought, DreamWorks has achieved what many in Hollywood have been unable to do: secure new sources of film funding in financially treacherous 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 a toehold in Hollywood.
Reliance -- whose parent, Reliance-ADA Group, has a market cap of $38 billion with far-flung interests that include communications, power generation and healthcare -- retains all distribution rights to the DreamWorks movies in India.
DreamWorks plans to produce as many as 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. The debt financing was led by JPMorgan Securities, which brought together eight other lenders including Bank of America Corp., Wells Fargo & Co., City National Bank and Comerica Bank.
"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 media company, which is headed by billionaire investor Anil Ambani, originally said it was prepared to invest as much as $550 million in Spielberg's new studio.
Of the six or so films, Snider said she expected one to be a "big tent pole" movie. She noted that she and Spielberg retained "complete creative control" over the movies and that Reliance had given them "a generous greenlighting cap" that is more than $100 million for each film.
During the period when JPMorgan was struggling to raise funds for DreamWorks, 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 Reliance 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 and have its first release in 2010.
In October, cameras will roll on "Dinner for Schmucks," a comedy budgeted at $75 million, directed by Jay Roach and starring Steve Carell, that the company will make in partnership with Paramount and Spyglass Entertainment.
Paramount will distribute the movie.
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 6-foot-tall invisible rabbit, will be financed by 20th Century Fox, which had been developing the project, and DreamWorks.
Fox and Disney will distribute the movie, but it is still undecided which studio will handle the domestic release and which will oversee the international release.
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 a man and his son who team up on the boxing circuit -- in which the fighters are robots; "Motorcade," an action thriller about terrorists attacking the president's motorcade in Los Angeles; and an adaptation of the graphic novel "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 "The Adventures of Tintin: The Secret of the Unicorn," a 3-D film based on the classic Belgian comic strip series for Paramount and Sony Pictures, due out in 2011.