Spielberg's firm seals split from film giant

The principals behind DreamWorks SKG and Paramount Pictures sealed their parting of ways yesterday, allowing the DreamWorks studio to tie up with Reliance ADA Group of India to start a new film company.

As part of the agreement, the DreamWorks principals' new company will take the lead on a number of development projects, which Paramount will have the option to co-finance and co-distribute, the studios said in a joint statement.

The separation agreement involved 200 DreamWorks-developed projects with DreamWorks taking the lead on 15 to 20, according to trade reports. Paramount will take the lead on about 15 to 20 projects, permitting the Reliance-backed venture to co-finance and co-distribute.

Paramount will keep in its fold the remainder of the 200 projects, but the two appeared on Sunday to have parted ways amicably, leaving open the possibility of further collaboration.

DreamWorks, co-founded by director Steven Spielberg, is also expected as early as this week to announce a new studio distribution partner, widely expected to be General Electric Co's (GE.N) Universal, which will provide either domestic or international distribution on the shared Paramount projects, said a source familiar with the discussions.

Most DreamWorks staff are expected to be offered positions at the new company, DreamWorks and Paramount said. DreamWorks co-founder David Geffen will not join the new company.

In addition, Spielberg will continue to produce the Transformers franchise for Paramount and will also collaborate on three other Paramount films including, "When Worlds Collide".

The Hollywood-Bollywood linkup of DreamWorks and the Mumbai-based entertainment, financial and telecommunications giant two weeks ago caps two years of speculation and feuding between the DreamWorks partners and executives from Paramount and its corporate parent, Viacom Inc (VIAb.N).

"We have had a great run with the DreamWorks team both creatively and financially," said Brad Grey, chairman and chief executive of Paramount Pictures. "In particular, it has been a true honor working closely with a storyteller of Steven's talent and stature."

Spielberg added: "Brad is a friend and I am pleased to be able to continue to work with him and his team with whom we have shared many successes."

Despite their uneasy partnership, DreamWorks continued to churn out successful movies for Paramount, including last year's hits "Transformers", "Disturbia" and "Blades of Glory".

DreamWorks Animation (DWA.N), a separate publicly held studio run by another DreamWorks co-founder, Jeffrey Katzenberg, has its own distribution deal with Paramount through 2012.