According to The New York Times this week, Steven Spielberg’s DreamWorks SKG is currently negotiating with India-based Reliance Entertainment to sell it an equity stake for $500-600 million. DreamWorks has the right to do this as it can opt out of its current contract with its parent Paramount Pictures at the end of the year.
This is a classic case of Spielberg enhancing his negotiation power by implementing Golden Rule Two: Maximize Your Leverage. By starting negotiations with Reliance Entertainment (and probably others), Spielberg has added and potentially improved his Plan B to staying with Paramount. Without Reliance, his Plan B to Paramount is probably not great (of course, it is Spielberg, so it can’t be all bad). But with Reliance and potentially others out there and with Paramount knowing it, he has created a potentially great alternative to renegotiating a more favorable contract with Paramount.
By developing a strong Plan B and by creating competition between his potential suitors, Spielberg has significantly strengthened his leverage in both negotiations.