Is the Saudi-Hollywood love affair back on?

Judging by the third edition of the Red Sea International Film Festival, which wrapped on Dec. 9, the answer is yes. A parade of stars including Will Smith, Michelle Williams, Chris Hemsworth, Johnny Depp and Halle Berry made the pilgrimage to Jeddah even as the Israel-Hamas conflict raged just 700 miles north.

This year’s guest list signals a dramatic reversal in relations from five years ago, when Hollywood’s outrage campaign was in full swing following the murder of The Washington Post columnist Jamal Khashoggi at the hands of Saudi government agents. In the aftermath, WME’s Ari Emanuel cut ties with the kingdom, returning its $400 million investment just six months after courting Crown Prince Mohammed bin Salman during his visit to Los Angeles.

While enticing big-name talent this year generated positive publicity, the real Saudi mandate is to diversify the country’s economy beyond oil, with the film industry one of its highest priorities. And the country’s vast treasury is an irresistible lure for a business constantly on the prowl for a deep-pocketed partner.

Saudi-Hollywood deals had slowed to a trickle, but the spigot appears to be open again. Former Warner Bros. production president Greg Silverman inked a pact with Film AlUla for 10 projects over three years, the most significant Saudi collaboration since the kingdom’s status plummeted from Hollywood VIP to persona non grata.

“The great power that I’ve seen from the kingdom is long-term thinking,” says Silverman, CEO of Stampede Ventures. “They have the ability here to think in five- or 10- or 20-year plans. That is not really possible in the States because leadership of the studios change.”

But is a much bigger deal looming? In recent weeks, chatter swirled that the country’s $800 billion Public Investment Fund is looking to buy a major studio, namely Paramount. Sources say the Saudis also have an eye on the Comcast-owned Golf Channel to complement its LIV Golf, which recently lured reigning Masters champ Jon Rahm from the PGA Tour. (Disclosure: SRMG, a publicly traded media firm in Saudi Arabia, is a minority investor in PMC, the parent company of Variety.)

“I’d be shocked if there wasn’t in the next couple of years some kind of [major Hollywood] collaboration or acquisition,” Film AlUla executive director Charlene Deleon-Jones says.

For his part, Emanuel indicated he was willing to reunite with the Saudis in an interview on Freakonomics Radio in May, and chalked up the Khashoggi episode to this: “Governments do bad things.”

Even the staunchest Saudi critics in Hollywood no longer hold a grudge. Sources say Sean Penn, who co-hosted a private screening of the anti-MBS documentary “The Dissident” and chastised Netflix for not stepping up to buy the Bryan Fogel-helmed film, was poised to screen his Volodymyr Zelenskyy documentary “Superpower” at Red Sea. Though the Penn appearance was never announced, many on the ground were aware that he was coming and were unsure of why he didn’t show up. A Penn source cites a scheduling conflict.

For stars, a Red Sea RSVP came with a hefty check. Sources say Smith received $1 million to attend and was put up at the luxury Assila hotel in Jeddah, while Gwyneth Paltrow pulled down an even greater sum. Some say that’s par for the course. “That part of the world you get paid,” says one top agent. It’s also small change compared with what Rahm will earn — some $300 million over three years. Depp was rumored to be staying at a royal palace, but a source familiar with his itinerary says he actually stayed at the Shangri-La resort on the Red Sea. From the Saudi perspective, the biggest get was Smith’s “Suicide Squad” co-star Joel Kinnaman given that the actor hails from Sweden, a country that has been particularly critical of Saudi’s human rights record. Still, others want their Saudi associations to fly below the radar. One high-profile actress who will star in a movie shot in the country next year opted not to have her name used at the festival.

Meanwhile, sources say that half a dozen A-list directors will travel to Saudi Arabia in March to tour the state-of-the-art soundstages in AlUla and Neom. “Elvis” director Baz Luhrmann, who served as jury president at the festival, tells Variety that he made an “investigative” trip to the country before signing on and was “frankly blown away.” “I’m attracted to the idea of making something here,” he adds.

In fact, several actors and directors have expressed curiosity and have reached out to Luhrmann. He notes: “I think it’s finally sinking in that the change here is authentic and actually inevitable.”