Financially starved production house Dreamworks Studios will raise a total of $825 million (around Rs. 4000 crore) over the next three years with the help of Reliance ADA group chairman Anil Ambani who has injected $325 million as equity. Disney has also infused $150 million while the balance will be raised from banks and financial institutions, MoneyControl reports.
Reliance ADA Group’s Big Entertainment owns 50% of Dreamworks. In return, Big Entertainment will hold all the marketing and distribution rights for the movies produced by it for India. This includes DTH, DVD and theatre rights. Dreamworks has tied up with Walt Disney to handle global marketing and distribution of its films for 6 years starting in 2010, but this will exclude India.
IPO?
Reliance Entertainment may also be using this development to go public. ET says Ambani hinted at going in for a listing during the conference call with reporters after the meeting with media mogul Steven Spielberg, co-founder of Dreamworks and Stacey Snider, CEO of the studio. ContentSutra reports that the famous George Soros deal has still not been closed. Will it ever?
Lower Valuation, Financing Woes, Movies In 2010
Rumours of this development have been doing the rounds since September, 2008, when the deal was valued at a much higher $1.2 billion. Then, the ADA Group was said to be investing $500 million in equity, and $700 million in debt through JP Morgan Chase.
There was no formal announcement and Reuters now quotes Amit Khanna, chairman of Reliance Big Entertainment, as saying that the amount was revised as it was not needed and that future funding would be raised using the same balance of debt and equity.
Dreamworks has been looking for monetary backing to run its operations after its partnership with Viacom company Paramount broke off following disputes between managements. With the funding, Dreamworks’ stalled movies such as Dinner for Schmucks and Cowboys and Aliens will begin to roll and are expected to be released in 2010 and 2011 respectively. Amitabh Jhunjhunwala, Vice-chairman, Reliance Capital and Alan Levine, entertainment advisor, JPMorgan and former CEO of Sony Pictures will be on the board of Dreamworks Studios. Dreamworks produces around 6 films a year.
Related
- Reliance ADA Group Inks BIG $1.2 Billion Dreamworks Deal
- Reliance ADAG Launches BIG Productions; All The BIG Businesses
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3 Comments until now.
i think an IPO in the short term sounds like a good idea, you never know how the films will fare so its probably better to get the money while there is still some buoyancy
Now a slate of big announcements… high profile hollywood A listers visits, new projects announced and then an IPO.. Huge value multiples and even bigger business plan…along the lines of Reliance Power where we all loose money… Deja Vu?
That has always been the case with ADAG companies…they have always sought aggressive valuations!
So do you expect an Indian listing or a dual listing or only a NYSE listing?