Why India's Reliance Is Going Hollywood

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Casting a Wide Entertainment Net

Reliance scripted its Hollywood entry more than eight months ago. Last year, Reliance invested (BusinessWeek.com, 4/15/08) in Phoenix Theatres, a Knoxville (Tenn.)-based film management company. It bought Burbank (Calif.)-based Lowry Digital Images, a film imaging and restoration outfit, in April. Early this year, Reliance, which owns more than 170 cinemas in India, quietly acquired 250 cinemas from mom-and-pop operators in 28 cities in the U.S. including San Jose, Chicago, and Washington, D.C.

The U.S. isn't the only country where Reliance is expanding. In May, it bought a chain of 25 cinemas in Malaysia. Like the purchases in the U.S., the Malaysian cinemas were targeting the large Indian diaspora and also other Asian communities such as the Chinese, Koreans, and Japanese. The plan is to exhibit Bollywood movies, as well as regional Indian films in languages like Telugu and other Asian languages.

Reliance may be a newcomer, but it has already shown it can command attention from the film industry's elite. At the Cannes Film Festival last month, Khanna (an erstwhile Bollywood director and lyricist) announced that Reliance was spending $1 billion to develop films over the next two years. It struck deals with the production houses of eight Hollywood actors including Clooney, Pitt, Hanks, and Cage. The deal, brokered by Hollywood's Creative Artists Agency, allows Reliance to pay for the development of scripts and gives it the option to fund up to half the cost of making any film it develops—and thereby reap half the profits. The films would then likely be distributed by Hollywood studios, with Reliance retaining some foreign rights.

Reliance's global aspirations cut across every business category, with interests in power, telecom, and financial services, as well as music, broadcasting, social networking, and gaming Web sites. Reliance, India's second-largest telecom player, is also currently in merger talks (BusinessWeek.com, 5/27/08) with South Africa's MTN to create a $63 billion telecom juggernaut with 116 million subscribers, larger than AT&T (T) and many European players. In its bid for MTN, Anil Ambani's company is fighting against Reliance Industries, controlled by his elder brother Mukesh Ambani, with whom he has had an ongoing feud. Mukesh says that he has the first right of refusal in the MTN deal.

Lakshman covers India business for BusinessWeek. Grover is Los Angeles bureau chief for BusinessWeek.