Spielberg's movie plans in limbo for want of $100m

Funding gap threatens to undermine director's aim to turn his DreamWorks studio into a major player

(Getty Images)

He is the father of the modern blockbuster, with a CV that includes some of the most famous films in history. But even Steven Spielberg's career is suffering under the growing pressures of the economic crisis.

The movie mogul's hopes of creating a powerful independent production company have been dealt a serious financial blow by the sudden, acrimonious collapse of talks aimed at securing a distribution deal with Universal Studios.

Spielberg, who recently "divorced" Paramount Pictures to turn his company, DreamWorks, into a private firm, announced this weekend that negotiations with NBC Universal, which owns the studio, had broken down over a $100m funding gap.

Ironically, given that he is responsible for Jaws, ET, Indiana Jones and dozens of Hollywood's greatest box-office sensations, Spielberg has for months been struggling to raise $1.2bn he needs to fund DreamWorks' ambitious slate of proposed films.

His deal with Universal, which was vital to the financial stability of the venture, fell apart after Spielberg suddenly asked the studio for roughly $100m of extra cash to help plug a hole in DreamWorks' finances.

The studio privately called the request "despicable and deplorable", according to the Hollywood newspaper Variety, which revealed that Spielberg had secretly begun funding talks with Disney in an apparent attempt to force Universal's hand.

"Over the past several weeks DreamWorks has demanded material changes to previously agreed upon terms," Universal said in a statement. "It is clear that DreamWorks' needs and Universal's business interests are no longer in alignment. "

Until the director can secure the money from an alternative source he'll be unable to begin work on the 17 films that DreamWorks intends to produce over three years. They include Hereafter, written by Peter Morgan, a terrorist thriller called Motorcade, and the comedy Dinner for Schmucks with Steve Carell.

It's hardly the bright future the director imagined when he announced last year that he was leaving Paramount to turn DreamWorks into an independent company. At the time, the credit markets were flush with capital, and raising $1.2bn he required appeared to be a piece of cake.

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However, DreamWorks failed to secure a pay-TV deal with the cable channels HBO and Showtime, and was hampered by the collapse of AIG, which was due to provide a portion of its start-up cash.

A deal with an Indian company called Reliance Big Entertainment was conditional on Spielberg raising matching funding from other sources. But his bankers JP Morgan are struggling. At present, they are still hoping to raise $325m.

Neither Disney nor DreamWorks would comment yesterday. However, the proposed alternative tie-up may represent Spielberg's last hope of getting his company off the ground.