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India’s Reliance: Still a DreamWorks Backer, But Hollywood Sojourn Has Cost a Fortune

The Cannes Film Festival has always provided the perfect stage to make propitious announcements given the insatiable appetite of the world press that gathers in the South of France each year for the celebrated event. But even Cannes veterans were surprised in May 2008 when giant Reliance Entertainment of India trumpeted that it would make a significant investment in the entertainment industry, and that Hollywood would be a key beneficiary.

Flanked by a phalanx of publicists and powerful agents from CAA, Reliance toppers announced that the company would give George Clooney, Tom Hanks, Brad Pitt and Julia Roberts, among other high-profile talent, substantial development money to initiate projects at their respective production houses. Within weeks, Reliance disclosed it would make an even bigger bet — investing hundreds of millions of dollars to own a 50% stake in Steven Spielberg’s relaunched movie outfit DreamWorks. At this year’s Cannes, Reliance is making no such pronouncements.

Reliance’s entertainment investments have provided a dramatic reminder of the perilous risks that outsiders take with their Hollywood forays. Most of the company’s development deals unveiled at Cannes have turned out to be dead ends, with the notable exception of DreamWorks’ bigscreen adaptation of “The Help,” which originally sprang from a pact with Chris Columbus. Reliance claims that the profit from that move alone more than covered its $6 million overall development exposure. But after five years of DreamWorks’ inability to produce a single global blockbuster or launch a new film franchise, like many rival studios — or like Spielberg did in his early years with “Jaws,” “E.T.” and “Jurassic Park” — Reliance’s ill-fated investment of $300 million-$400 million in the production company has raised serious questions in the Hollywood community about the Indian conglom’s continued support of Spielberg’s operation.

However, in an interview with Variety, Reliance vice chairman and group managing director Amitabh Jhunjhunwala vigorously disputed rumors that his company has lost its enthusiasm for the movie business. In fact, the usually press-shy executive affirmed that Reliance’s commitment to Spielberg and DreamWorks remains solid —  despite the expected departure of his partner and DreamWorks production chief Stacey Snider, at the end of the year, when her contract expires.

(Illustration by Miriam Migliazzi and Mart Klein)

“We are very happy with our relationship with Steven and with his company,” Jhunjhunwala declared, making no reference to Snider, who has been in talks to become the top lieutenant to Jim Gianopulos at 20th Century Fox.

While he would not provide specific numbers, Jhunjhunwala says Reliance’s continued investment in DreamWorks would cover at least four or five films a year, starting with two newly announced projects that Spielberg would personally direct: An untitled thriller set in the Cold War to star Hanks, and “BFG,” a children’s fantasy tale based on a Roald Dahl story.

“Reliance is a great partner, a rock of support and we thank them for the vote of confidence they continue to give us as we move ahead on the exciting projects in our pipeline,” Spielberg says.

The filmmaker, who has not directed a picture since “Lincoln,” has been agonizing for months over which project to do next, and has done little to address the issue of whom he might tap to replace Snider when she leaves. Despite her wishes, he has shown no indication of letting her out of her contract early.

Filling Snider’s role is critical, since Spielberg needs someone he can trust to keep DreamWorks competitive, particularly after its recent spate of box office duds, including “People Like Us,” “Delivery Man,” “The Fifth Estate” and most recently “Need for Speed.” The underperformance of those films, as well as “Cowboys & Aliens,” overshadowed the success of the company’s acclaimed movies, “Lincoln” and “The Help,” and “Real Steel” — which barely eked out a profit.

DeamWorks’ development and production activities began to dramatically slow down as funds began to dwindle. In 2012, Reliance agreed to continue financing the company, but with a directive to make fewer movies each year.

In addition to Spielberg’s next directorial outing — the Hanks movie, which is to begin shooting in September — DreamWorks officials say at least two other “go” pictures will be disclosed shortly. The company has been developing scripts for such directors as Valerie Faris and Jonathan Dayton, Steve Pink and Derek Cianfrance, and has recently acquired novels for producers Marc Platt, Mark Sourian and Carla Hacken.

Along with its ongoing deal with DreamWorks, Reliance also is a major equity investor in former Universal Pictures chief David Linde’s production company Lava Bear, which is showing four films at Cannes this year, including “The Rover.”

Meanwhile, however, some of Reliance’s other entertainment investments have sputtered.

Indeed, two key Reliance divisions, Reliance MediaWorks — whose digital post-production investments have had their ups and downs — and Reliance Broadcast Network were de-listed from the stock market in March. And, the
company’s joint venture with CBS covering three English-language channels has been shuttered.

Jhunjhunwala maintains that in taking the MediaWorks and Broadcast Network ventures private, Reliance is actually increasing its support of them. He further asserted that his company’s investments in 45 radio stations and a media joint venture with Bloomberg are highly profitable. Reliance divisions provide principal post-production services on 80% of all India’s films, he says.

Reliance ADA’s other media interests are privately held.

Reliance’s initial foray into Hollywood dates back to a 2006 multi-picture, five-year deal with producer Ashok Amritraj’s Hyde Park Entertainment. The first film to come out, “Street Fighter: The Legend of Chun-Li,” released by Fox, was a disappointment, as was the second picture, “The Other End of the Line,” a drama about call centers directed by James Dodson and distributed by MGM.

A year later, Reliance struck a pact with MTV Networks India to make films for India’s youth market. In 2008, a much-ballyhooed venture with billionaire investor George Soros, who offered to buy 3% of Reliance Entertainment for $100 million, drew major press coverage but failed to materialize.

Reliance nonetheless decided to diversify its film ventures in 2010, with the acquisition of a majority stake (76%) in IM Global, the international sales company run by Stuart Ford, once co-head of international distribution for Miramax Films. IM Global, which has expanded its reach over the years, took positions in films such as “Dredd,” “The Butler,” “Insidious” and “Paranormal Activity.” IM’s revenues now top $100 million, with output deals in 30 countries covering some 15 films, according to Jhunjhunwala.

IM Global also is attempting to make significant inroads in the film business in China, where it is closely aligned with Reliance ADA Group. Last year, IM opened a China office to handle sales and oversee Asian regional distribution. The company is soon expected to announce an output deal to handle international sales on a slate of Chinese-language films produced by the Huayi Bros., China’s top private sector film group.

In late 2012, Reliance struck a deal with Wanda, the Chinese company that acquired the AMC theater chain with an initial focus on real estate development.

Whatever swings Reliance may have had in its entertainment fortunes have had little impact on the global conglomerate, since that sector represents a tiny fraction of its overall business. And to Anil Ambani, the chairman of Reliance Group, and Jhunjhunwala, Spielberg is still an icon in the cinema world; a Spielberg portrait hangs in Ambani’s office.

“Steven is an outstanding individual who is passionate about his films, and we share his passion,” Jhunjhunwala says. The filmmaker visited Ambani’s residence in Mumbai in March 2013 shortly after winning a number of awards for “Lincoln,” including the actor Oscar for Daniel Day-Lewis, to chat with his Reliance backers and to hobnob with top Indian actor Amitabh Bachchan in front of a crowd of celebrities.

When Reliance finally locked up its deal to back DreamWorks in July 2009, there was a private cocktail party in New York attended by Ambani and Jhunjhunwala, Spielberg, Snider and a clutch of Wall Street financiers, among other prominent figures and press members, to commemorate the occasion.

“We are delighted to partner with such uniquely talented individuals as Steven Spielberg and Stacey Snider,” Ambani said at the time in a rare statement to the media. “Ever since we looked at their business plan, I have never doubted that we would succeed in providing them with the financial muscle required to realize their dreams.”

Spielberg and his company are still chasing that dream.

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