Ever since Anil and Mukesh Ambani split the Reliance empire three years ago this week, the tension has heated between the brothers and their respective companies – ADAG and RIL – as the two try to show each other up in every area from construction to telecom to fine art and now… Hollywood movies.
As I’ve written before in this blog, Anil Ambani, who controls India’s Reliance Anil Dhirubhai Ambani Group (ADAG), is a consummate dealmaker. How many other tycoons are there around with the stamina and flair to stun the business world with a headline-grabbing international financing deal in a totally new area just as another deal runs in to problems? That is what Ambani has done this week.
His elder brother, Mukesh Ambani last week tried to scupper a plan by ADAG’s Reliance Communications to merge with MTN of South Africa in a $20 billion telecoms deal. Mukesh Ambani claimed he had the right of first refusal if the telecom company shares were to be sold.
Mukesh Ambani has successfully upset the progress of talks with MTN, and Anil Ambani is now hitting back by threatening to sue three senior executives of Mukesh Ambani’s Reliance Industries (RIL) for criminal breach of trust in an agreement struck in January 2006 over supply of gas from RIL to a planned ADAG power plant. This breach of trust allegation might be spread to a similar allegedly one-sided agreement over RIL having first rights to the telecom shares.
But the real headline grabber is that Anil Ambani is now in talks with Hollywood’s Steven Spielberg and the founders of the DreamWorks (DWA) film studio about his Reliance Big Entertainment providing $500-600 million that will help DreamWorks manage its current split from Viacom’s (VIA) Paramount Pictures.
Reliance and DreamWorks would form a joint venture with $1.5 billion in debt and equity for DreamWorks to make movies in the U.S.A. that would be distributed by another Hollywood studio.
This would be a major break for the film industries in both countries, coming at a time of increasing tensions between Hollywood’s filmmakers and powerful studios that want to reduce advanced mega payments to stars. Studios are trying to cut back on so-called first-dollar gross deals that guarantee stars a box office pay-out before the films themselves become profitable.
India’s Bollywood is the world’s most prolific movie centre with more than 1,000 releases a year but it has not till recently begun to formalize its operations under big corporate financiers like Ambani and look abroad.
On top of all that of course, as I reported last week, the Harmony Art Foundation, run by Tina Ambani, wife of Anil, stunned the art world by paying a record $2.5 million at a Christie’s auction in London for a work by the late F.N. Souza, one of India’s greatest modern artists.
Mukesh Ambani couldn’t do much about that headline-grabbing event but, as the Financial Times’ Lex column read Thursday morning “Expect big brother Mukesh Ambani…… to enter stage left with another attempted spoiler” over the Spielberg deal.