DreamWorks is free, free at last!

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It’s official. The Wall Street Journal has the scoop that DreamWorks SKG is creating a new $1.2-billion company, having concluded its long-anticipated financing deal with Reliance, one of India’s biggest entertainment conglomerates. The good news is that DreamWorks is now backed by a mega company that isn’t caught up in the Wall Street meltdown of recent days. The new DreamWorks will be run by Steven Spielberg and Stacey Snider, with longtime DreamWorks partner David Geffen bowing out of active participation in the company. The move ends a contentious two-year-plus marriage with Paramount Pictures, which was frequently at odds with the DreamWorks team.

So what happens next? DreamWorks still has two sets of closely watched negotiations to complete: a new studio distribution deal for its film product and a severance package with Paramount, which has a host of DreamWorks development projects in hand. (Paramount has been releasing DreamWorks films for the past two years since the company was purchased in 2006 by Viacom, Paramount’s parent company.) As I’ve written in the past, there aren’t many serious contenders for DreamWorks product, largely because of all the shrinkage in the marketplace. The most obvious candidate is Universal Pictures, which has had a long, looooong relationship with Spielberg -- he still keeps his Amblin offices on the Universal lot.

But Universal is no pushover. As my colleague Claudia Eller pointed out today, Universal had no problems saying no to Spielberg when he and Peter Jackson went to Universal, hoping for a partner to take some of the financial risk off of Paramount, which is financing their ambitious series of ‘Tintin’ films. Universal would love to have DreamWorks product to beef up its home video pipeline, but the studio’s production team might not want the headache of having to fight it out with Spielberg and Snider every year over whose movie gets a coveted 4th of July or Thanksgiving weekend release date.

But the rest of Hollywood is probably celebrating. With so many companies foundering, in a desperate search for funding or totally out of business, seeing DreamWorks back up and running with a nice chunk of cash in the bank is probably music to the ears of agents, producers and screenwriters everywhere. In Hollywood, where everyone is rooting for friends and enemies alike to fail, the one person who gets a big wet welcoming kiss is the new buyer in town.