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In need of cash, Hollywood looks to India, China

Disney's $4 billion purchase of “Iron Man” moviemaker Marvel Entertainment signals a possible wave of media industry consolidation, but the cash to do deals may come from India or China, not Hollywood or Wall Street.

Even before Walt Disney Co and Marvel Entertainment Inc made their announcement on Monday, Hollywood watchers said Indian firm Reliance ADA Group's recent $325 million investment in Steven Spielberg's DreamWorks movie studio was a sign that opportunity exists for similar deals.

As the recession took hold in late 2007, Hollywood saw financing from US hedge funds and banks dry up, and experts say Indian and Chinese firms are now in a better position to invest. For its part, Hollywood needs overseas cash to continue expanding globally where growth opportunities are strongest.

“If you have capital to invest, you can probably cut a better deal now than any time in the last ten years,” said Larry Gerbrandt, principal at consultancy Media Valuation Partners.

“A lot of Indian and Chinese companies have excess capital these days and Hollywood, aside from the fact there's a certain glamour factor, those (Indian and Chinese) markets also need content, so there's interesting deals to be made.”

Sky Moore, an attorney who worked with Reliance as it put together the DreamWorks financing package, said a bigger deal could be in the offing within two years.

“I think the bigger move is buying a studio, and I don't know if it will be (a company from) India or China, but I think somebody is going to buy a studio,” Moore said.

The Disney/Marvel deal fueled speculation DreamWorks Animation SKG Inc, maker of the “Shrek” movies and a separate company from DreamWorks Studios, could be next on the acquisition target list because of its solid position in the marketplace and focus on the lucrative family market.

Moore and Gerbrandt also named Metro-Goldwyn-Mayer Inc as a potential acquisition target, although they said they had no specific information of any deal in the works. (Reuters)