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Reliance’s Hollywood Connections Offer a Reminder: Biz Can Easily Burn Outsiders

The Ambani name — the family behind DreamWorks’ investor Reliance-Anil Dhirubhai Ambani Group — counts for plenty in India.

Anil’s father, Dhirubhai, was a rags-to-riches trader who helped introduce a raft of modern industries to India, and made a fortune so vast that it spawned two industrial empires.

Sons Mukesh and Anil took over the $20 billion Reliance Industries empire in 2002 after Dhirubhai Ambani’s death. Ownership issues soon divided the two brothers, and from 2005 to 2006, they broke the group into two. Mukesh took control of the Reliance Industries name and held onto textiles, nearly the entire oil-to-petrochemicals business, and a number of retail businesses. The new Anil-controlled Reliance ADA Group took telecoms, power and financial services — as well as the seeds of the entertainment business.

Relations between the two billionaire brothers have been frosty and at times fractious — Reliance Industries bought into the network broadband sector and soon clashed with Reliance ADA Group in telecoms and Internet services — though until only a couple of years ago, they and their families lived on separate floors of a family-owned skyscraper in old-money South Mumbai.

Given the Ambanis’ position in more traditional industries, the expansion into entertainment surprised rivals. Still, film is close to the heart of Indian culture — and Anil is married to former actress Tina Munim (now Tina Ambani).

Early on, Reliance ADA opted for scale, reasoning that producing or investing in one or two movies per year was too small a business. In 2005, the company acquired Adlabs, with interests in film processing, print manufacturing, exhibition and production.

At the same time, Reliance was creating television channels (it also owns Big Synergy, among the most profitable TV production companies in India). And film production/distribution unit Reliance Big Pictures sprang to life with a fistful of pacts with high-profile Indian producers. While its joint venture with CBS in three English-language TV channels formed in 2010 was shuttered by mutual agreement earlier this year, RBN has increased its focus on local-language channels, dubbed Big Magic.

Elsewhere in the group, the Reliance Communications unit saw mobile phone services boom (it is now India’s No. 2 cell phone service with some 150 million subs); in 2008, it moved into satellite TV.

Reliance ADA’s Big Cinemas exhibition business expanded rapidly between 2006 and 2009, and reached approximately 250 screens in India, at which point it was the largest circuit in India (it also has another 200 screens in the U.S.), although it has since hit a rocky patch that has impeded growth.

Like its Hollywood interests, Reliance ADA’s Indian holdings have had ups and downs. Reliance MediaWorks (renamed from Adlab in 2009) was taken off the stock market in March after losses of $224 million over four years. (Other Reliance ADA media interests are privately held.)  Before it was de-listed MediaWorks had built the largest and most advanced studio and soundstage complex in Mumbai, including Asia’s first digital intermediate lab with 4k capability, and in 2012 joined forces with Chinese production firm Beijing Galloping Horse to acquire bankrupt U.S. VFX firm Digital Domain.

Reliance says that its strategy now is focused on building an integrated and global media services company, and says it handles the lion’s share of post-production services on the subcontinent.

And not everybody thinks Reliance ADA should be counted out of showbiz.

“It is probably true Reliance has invested the best part of a billion dollars and lost hundreds of millions, but entertainment represents only 5% of its portfolio. And it is a private company,” says one insider. “Being in movies brings it other benefits, not least of which is stardust — and differentiation from all the other trading conglomerates in India.”

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