The deal will give DreamWorks its independence from Viacom Inc. subsidiary Paramount Pictures, which bought the production house for $1.6 billion in 2006. According to a second person close to the talks, the deal will save Paramount as much as $50 million a year by cutting loose the high-priced director and 150 other employees. That person also requested anonymity because he was not authorized to speak publicly.
The Wall Street Journal said on its Web site Friday that Reliance will invest $500 million and provide another $700 million in debt through JPMorgan Chase & Co.
The paper said the venture will produce about six movies a year.
Paramount released a statement wishing the DreamWorks principals well and said it would waive certain provisions of their original deal to allow them and their employees to join the new company without delay.
"The acquisition of DreamWorks has been beneficial both creatively and financially for Paramount," the studio said. "It gave us a solid slate of films to fill out our lineup, a valuable catalog we were able to monetize, and a development pipeline that will bear fruit for us for years to come."
Some hit movies produced while DreamWorks was housed at Paramount include the Will Ferrell comedy "Blades of Glory," "Transformers" and "Sweeney Todd: The Demon Barber of Fleet Street."
Paramount will retain the rights to all projects now in any stage of production with DreamWorks, including the "Transformers" sequel; "Tintin," based on the Belgian comic book hero; and "The 39 Clues," the second person said. Spielberg is still slated to direct the latter two films.
DreamWorks' name and logo is expected to follow Spielberg out the door, but the rights are actually owned by DreamWorks Animation SKG Inc., a separate, publicly traded company that made "Shrek" and "Kung Fu Panda," and headed by friend and DreamWorks co-founder Jeffrey Katzenberg, the second person said.
While the studio and Paramount notched many successes together, frictions emerged over the cost of keeping Spielberg and DreamWorks tied to Paramount.
Viacom Chief Executive Officer Philippe Dauman said in July that DreamWorks' departure would result in "savings in our overhead as well as our marketing, distribution and development spend."
DreamWorks SKG was founded in 1994 by Hollywood moguls Spielberg, Katzenberg and David Geffen.
Geffen, a billionaire who founded Geffen Records in 1980, is expected to leave the venture, while Spielberg and DreamWorks Chief Executive Officer Stacey Snider are to be partners with Reliance, according to the first person.
Paramount could still be involved in distributing films made by the group, including jointly produced movies such as the upcoming sequel "Transformers: Revenge of the Fallen."
And Spielberg is expected to continue to direct "Indiana Jones" sequels with Paramount and Lucasfilm as production companies.
Meanwhile, Reliance Entertainment - part of one of India's top conglomerates, Reliance ADA Group - is deepening the ties between Bollywood and Hollywood.
Reliance Entertainment has as many as 100 films in production and development in India, and Reliance Big Entertainment, a subsidiary, is focused on striking cross-border collaborations involving gaming, movies, online, animation and music.
During the Cannes Film Festival in May, Reliance Big Entertainment announced that it would invest $1 billion to develop and co-produce movies with Hollywood stars George Clooney, Brad Pitt, Tom Hanks and Nicholas Cage and filmmaker Chris Columbus' 1492 Pictures.