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Spielberg And Co. Look To India To Finance Next Move

DreamWorks chiefs Steven Spielberg and David Geffen are looking for their next move, and India may play a starring role.

Their deal with Viacom'sParamount Pictures expires at the end of this year, and Hollywood has been buzzing about conflict between the famous director and Viacom's top brass. And for months, rumors have been flying about what they might do next.

Now Spielberg and Co. are in talks with one of India's biggest entertainment conglomerates to create a joint venture: a new independent studio.

Here's how it would work: Reliancewould provide between $500 million and $600 million in financing, allowing Spielberg & Co to raise debt, giving the new independent studio up to $1.5 billion dollars in financing. The studio- likely run by Spielberg, Geffen, and Stacey Snider, now their top executive at DreamWorks--would churn out six movies a year. Then they'd distribute through one of the major movie studios--Universal Pictures (CNBC's sister company) and 20th Century Fox are reportedly frontrunners for that deal.

It would make sense for the DreamWorks team--they would get the creative freedom they can't necessarily get as a part of a public company. And the fact that their investors are continents away should help guarantee their operational independence.

It also makes a lot of sense for Reliance, which gets to leverage the weak dollar to get a stake in Hollywood's most famous director. Reliance says it plans to spend more than $1 billion dollars over the next year and a half to build up its global entertainment empire. And this potential deal would be just the latest in a long string of deals with big Hollywood names. Last month at the Cannes Film Festival Relianced announced financing deals for George Clooney, Tom Hanks, and Brad Pitt's production houses among others.

Reliance has big ambitious plans: a portfolio of new media and mobile businesses, divisions to tackle digital distribution, traditional home video distribution, plus the launch of a new Indian broadcast TV network. Spielberg's talent would provide a revenue stream for some of these ventures, but then there's the other angle. Spielberg could use these platforms as new ways to distribute his films down the road.

Standard and Poors Equity Analyst Tuna Amobi says that Reliance has such significant assets, that spending $600 million to invest in Spielberg would be a drop in the bucket. Amobi says he wouldn't be surprised if one day down the road Reliance tried to buy one of the major movie studios. There's no question -- India is rising.

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.