Steven Spielberg has returned to Universal Studios, where he made his name as a young director, after striking a seven-year distribution deal for his DreamWorks company.

The deal means Mr Spielberg has taken charge of his own destiny having negotiated his exit from Viacom (NYSE: VIA.B - News) , which paid $1.6bn for DreamWorks three years ago.

Mr Spielberg is being backed by Reliance Big Entertainment, an Indian media group, which is providing more than $500m of equity for his new venture. JPMorgan is arranging up to $700m of debt for DreamWorks but has delayed the loan syndication until credit markets have stabilised.

With a distribution deal now in place, Mr Spielberg and Stacey Snider, DreamWorks' chief executive, can begin preparing a slate of new films for release. The deal is for six films a year, for which Universal will receive an 8 per cent distribution fee.

In truth, Mr Spielberg never left Universal. His offices remained on the studio's production lot even after Viacom bought DreamWorks. But the new deal means he is truly back in the Universal fold.

The move reunites Mr Spielberg with Ron Meyer, an old friend and the chairman of Universal Studios, and ensures he will continue a glittering career that started at the studio under the tutelage of Lew Wasserman, the Hollywood mogul who turned the company into an industry powerhouse. Mr Spielberg got his first break in the film industry as an unpaid volunteer on the Universal lot and made his first films for the studio, including Jaws, which broke box office records on its release in 1975.

"This agreement starts a new chapter in what has been a long and successful association," said Mr Spielberg. "While it feels great to come home again, it feels like I never left."

He founded DreamWorks SKG with Jeffrey Katzenberg and David Geffen in 1997 and upset the traditional Hollywood model by forming a studio capable of producing and financing its own films. DreamWorks was acquired by Viacom's Paramount Pictures studio. But when Mr Spielberg's contract with the company expired recently he and Mr Geffen negotiated an exit.