Posted by: John Elliott | June 20, 2008

Ambani brothers’ rivalry reaches Hollywood

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.


Responses

  1. the deal between mtn and r com is certainly big news and with the current state of the market i guess it will help the rupee grow stronger. however Mukesh seems to be playing the villain by constantly poking into this deal. at the same time to me it looks like Mukesh who is currently building a billion dollar house is just trying to fund the construction with the mtn deal. if not the second point may be that he is trying to draw attention away from the building process to hide some thing. what ever the case be he certainly is a spoil sport.

  2. Ambanis are big names,big business and big aspirations.But atleast both have some national interest also.As a responsible Indian Brand name as well leading business group of world they must realise the grave consequences because of their cold war.Last Reliance power IPO became a big flop due to some or other reasons,but ADAG group doubted a corporate house for the debacle of IPO.In such crucial moment Reliance power IPO failed when market was trying to regain its strength.It is not important to do a business,but a good business.As their father Dhirubhai Ambani became one of the undisputed world leader and he had a vision for his country,the same has been expected from these two business tycoons.

  3. The Ambanis are prooving to be the role models for India. Out of competition or otherwise, their rise and their aggression is raising the profile on Indian businesses on the global stage.

    Hope they both both reach great heights and help India do the same in their own ways

  4. Mukesh Ambani was simply making a big noise over the MTN deal.Its just a jealous older brother trying to hamper a prosperous younger brothers growth. The claims made by Reliance Industries Limited are baseless and were based on an agreement in 2006, which was signed only by Reliance Industries officials and was later overturned by the Bombay High Court.
    This deal would would create one of the world’s largest emerging-markets telecom operators with 115m subscribers spread across Africa, India and the Middle East.
    The Dream Works and Big Entertainment association would have really caught Mukesh Ambani unaware and thus there was no hurdle caused by him.

  5. Anil Ambani is fired by the “Think Bigger Think Better” motto that, to me, seems to be directed at only his elder brother. In his consuming passion to prove to himself and the world that he is better than Mukesh, Anil may pull off some stunning deals. But, somewhere, there seems to be an inbuilt element of the classic ‘self destruction’ that has led to the equally stunning downfalls of many meteoric stars in many walks of life.

    Aggression is fine, but in Anil’s case it appears to be abnormal and may well prove to be unacceptably dysfunctional in the long run.

    http://www.vinodksharma.blogspot.com


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