Anil Ambani group and Spielberg have signed a deal to spend $1.5 billion on a new studio in Los Angeles. Th new studio will make films for global audiences. The deal will be funded by a mixture of equity and debt, and also involve leading investment banker JP Morgan Chase. According to sources, the deal will help Spielberg break away from DreamWorks, now owned by Viacom's Paramount Pictures. DreamWorks was sold to Viacom'a Paramount in 2006 for $1.6 billion. Since then, Spielberg and his team were eager to part ways with Paramount.

A person associated with the deal said that this strategic pact is being keenly watched as it involves the coming together of an Indian company that has its own grand plans in the media and entertainment space, and one of the most decorated filmmakers in the world.

It is believed that this project goes beyond mere financials and gives the Indian group the rights across various platforms - theatres, home video, DVD. Reliance Entertainment President Rajesh Sawhney declined to comment.

Stacey Snider is also associated with the new deal. He has been involved in some acclaimed productions like "Erin Brockovich", "The Fast and the Furious", "The Mummy", "A Beautiful Mind", "American Pie" and "Brokeback Mountain". Combination of Spielberg and Snider is regarded as the most successful filmmaking duo in history.

It is believed that the Anil Ambani group and Spielberg decided to join hands, both for the financial stability of their new venture and convergence of their ideas for the world of media and entertainment. Ambani's Reliance Big Entertainment had announced in Cannes in May that it would make a major foray into Hollywood and develop projects in partnership with some of the best-known actors like Brad Pitt, Tom Hanks, Nicolas Cage, Jim Carrey and George Clooney.

Company officials added that the deal marks the biggest entry of an Indian entity into the Hollywood's motion picture industry. Thirty films are likely to emanate from Reliance's co-financing and 10 will go into production soon.

The entertainment business of the Anil Ambani group had acquired in 2005, Adlabs Films Ltd, one of India's the largest entertainment companies with interests in film processing, production, exhibition and digital cinema. It has recently acquired 250 screens in US and 51 screens in Malaysia.

Paramount said it will not delay matters for Spielberg and his team, including DreamWorks partner David Geffen and chief executive Snider, in forging the pact with the Indian group.

The studio added:"To facilitate a timely and smooth transition, Paramount has waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company without delay."