Hollywood producers Steven Spielberg, David Geffen and Stacey Snider have decided to part ways with Paramount Pictures and move towards forming a new film company.

Mr. Spielberg and Mr. Geffen were the original founders of Dream Works SKG in 1994 with Jeffrey Katzenberg before it was sold to Viacom, Paramount’s parent company in 2006 for $1.6 billion. After becoming a division of Paramount, Dream Works was run by Ms Snider while Mr. Spielberg and Mr. Geffen operated as advisers without executive titles.

According to the present separation deal reached on Sunday, Mr Spielberg and Ms Snider will head the new film company which will take over the development of a number of projects which had been with Paramount. Paramount will still retain the option of co-financing and co-distributing these projects. The new company will be primarily backed by Reliance Big of India with debt financing raised by J.P.Morgan Securities. The new venture is expected to have resources worth at least $1.3 billion and would make six movies a year. Mr Geffen, who was an important force behind the organizing of the new company is not expected to be a part of it, clarified a joint statement from Dream Works and Paramount.

In recent times, the Dream Works subsidiary of Paramount has delivered several hits, with “Transformer” and “Norbit” being the most significant among them.