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Dreamworks deal with India firm nearly complete

MUMBAI - A deal between Steven Spielberg's DreamWorks SKG and one of India's largest entertainment conglomerates to set up a new film company is on the verge of completion, the Wall Street Journal reported on Saturday.

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The deal with Mumbai-based Reliance ADA Group is the initial step in Spielberg's and DreamWorks co-founder David Geffen's plan to leave Paramount Pictures and set up their own studio to make films to be distributed by a soon-to-be-determined studio.

Speculation has swirled for months regarding the next probable move for the duo as their long-troubled relationship with DreamWorks parent Paramount, a unit of Viacom Inc VIAb.N, flared up publicly last fall.

Under the agreement, Reliance ADA would invest about $500 million equity in the new movie venture and another $500 million in debt through J.P. Morgan Chase & Co., the Wall Street Journal said, quoting people familiar with the matter.

A Reliance ADA spokeswoman did not immediately return calls seeking comment.

People familiar with the situation say an agreement will probably be reached next week, allowing Spielberg and his DreamWorks team to leave Paramount as early as November, the paper said.

Spielberg is said to be looking closely at General Electric Co.'s GE.N Universal Pictures, where he started his career, to distribute the venture's films, though no agreement has been reached.

DreamWorks was acquired by Paramount for $1.6 billion in 2006 and produced such hits as "Dreamgirls" while under Paramount's roof.