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EXCLUSIVE: I’ve just heard that Ryan Kavanaugh’s Relativity Media has closed a new round of financing with its longtime financial backer, New York-based hedge fund Elliott Associates. The amount is “in the $100s millions” which, according to my source, “is substantial enough to allow Relativity to close pending transactions which ensures that the company can produce, finance, and market enough films to make it competitive with, if not more so, than any major studio”. Ryan Kavanaugh confirmed my scoop and just told me, “We doubled in size and went from a production company to a studio. We have more capital needs.” Meanwhile, Elliott is proving the most patient of financiers.
Editor-in-Chief Nikki Finke - tip her here.
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I see a great 60 minutes segment in the near future
You forgot the opener – “Based on the success of Skyline, I’ve just heard…
Tax Shelter Schlock House
Either the emporer has no clothes…or he’s wearing and Armani tux.
Well…lets look at just some of their box office successes…Frost/Nixon, Burn After Reading, Hancock, Mamma Mia!, Pineapple Express, Atonement, American Gangster, 3:10 to Yuma, Talladega Nights: The Ballad of Ricky Bobby, The Pursuit of Happyness, and 300…The Fighter!?
I’m guessing Armani.
Of the titles you mentioned only the Fighter was “produced” inhouse. Everything else was part of their CoFi deal with film’s corresponding studio. Not saying that they didn’t make any money from those films, just that because they CoFi so many films, it appears as if they may have made the films. When In reality they simply contribute some of the money to have someone else make the film.
Following their huge hits Warrior’s Way and Season of the Witch and in celebration of their mega-opening for Take Me Home Tonight this makes a lot of sense.
One of the great untold stories of Hollywood is NOT Ryan Kavanaugh and Relativity, but rather just who is the hedge fund, Elliot Associates? What do they truly get out of a financial relationship that at best (AT BEST) they have broken even on, and more likely are under water?
The performance of the Relativity single picture business speaks for itself thus far. There’s no mystery there. Their Rogue acquisition speaks for itself (remember Rogue Lifestyle?) as well. The management structure speaks for itself. All of this is readily apparent to an investor conducting the most minimal of due diligence.
So what is the Elliot motivation? Is this the best ROI they can find?
Kind of amazed that no aspiring entertainment journalist has dug into this story. Seems like it would be a great one.
Vanity Fair? Esquire? Wall Street Journal? Anyone?
So this is fresh money? Elliot isn’t just swapping debt for equity?
To say the single picture business speaks for itself and they have at best, broken even, shows your lack of understanding for both their financial model and how their funding and revenue streams actually work.
Also, you say Elliot as if they are Al Quaida. They are a reputable firm who has developed a stellar reputation based upon their funding of Relativity who have outperformed all the other film funds.
Correct, the Relativity movie formula is #winning
By spending $37 on production and $22 in P&A on Season of the Witch and opening it to $10 they are actually making money by losing money, every warlock knows that.
Also, if they open Take Me Home Tonight below where Drive Angry ($5) opened for Summit (a company that also uses the foreign presale model) then the fact that they’re making money while those Twilight-tools lose money proves further proves their brilliance.
Yeah, I’m sure Season of the Witch’s budget was really $37 million. Just like The Fighter’s budget was $25 million. The real below the line number was $11. David O’Russell even admitted in on the Hollywood Reporter’s Director’s roundtable. And Relativity never pays big bucks above the line. I bet you the real budget for Season of the Witch was probably like $25, which with an international star like Cage (or like he used to be) you could easily presale it for that. The money they make back on the production rebate then covers PA. Any money they make at the box office, DVD, netflicks ect is all profit. I promise you that is closer to the reality of the situation than what you are proposing.
Yeah, no. If Relativity had actually figured out how to make money on bomb after bomb they would be announcing $2 billion in funding not $200 million.
I’m not wishing for their demise. In fact I welcome all non-Gaddafi money to Hollywood. But I do wish that they’d respect this town enough to own up to their misses and not spew BS about magic greenlight formulas and foreign pre-sales excusing every weak opening.
You do know that Season of the Witch is just under $72 M WW, don’t you? With openings still pending in Spain, Italy, and Germany? So if it hits 100 M WW, not even counting DVD money, with a prod budget under 40M, are you still going to say that’s a bomb?
Is this money strictly for film or also television, because they must find a way to turn a profit. Also, I’m pretty sure they’re name was attached to The Social Network and The Fighter, so they aren’t strictly associated with underperforming genre films.
What’s so hard to figure out? They presell their films like most foreign sales companies – which covers a good portion of the budgets or buy them for domestic at bargain rates. They’re building a library and not taking as many risks as you might think.
looking forward to comments on this one!
Skyline was produced for $10 million and made almost $70 worldwide.
but you’re not taking into account P&A, etc.
Yes – and if Relativity got every dime of Box Office rather than a percentage of film rentals, if Relativity didn’t have to pay a distribution fee, Prints and advertising, and royalties that model would work – but – In the real world: the exhibitors split the box office gross with the distributor on a sliding scale after they cover their own nut. P&A on a shiny turd like Skyline is more than the production budget. There is no licensing revenues because no child wants a sweaty, dirty, bimbo action figure to play with. When all is said and done, Skyline might have made a very, very modest profit – that probably was eaten up by the hookers and blow budget or was spent on Warriors Way.
Hollywood Maddoff lives to scam another year!
I think Elliott must like having dinner with celebrities. That’s the only way to explain it. I think the only way you’ll get a clear picture of what’s really going on behind closed doors is when a former employee like Scott Lambert or Geoff Ammer goes on the record, but I’m pretty sure they received nice packages to keep their lips sealed. If I’m an investor at the hedge fund, I want to see some transparency in those books or call foul.
Why are people rooting for Relativity’s demise? This makes no sense. We (i.e. those people that work in this town) NEED Relativity. They fund the majority of Universal and Columbia’s slate. That is two out of the six major studios or for all of you math whizzes out there, exactly 33% of all studio films.
They also have their one off business model and make more movies that way. Again, why all the hate? I’m glad there are getting more money. It is good for all of us! Or are you saying we would be better off if The Fighter never got made? Because without them it wouldn’t have. What do you think David O’Russell thinks? Or Melissa Leo or Christian Bale, both of whom won Oscars for their roles in the film. Or the writers involved with that movie. Come on people, get with it!
Seriously. Let’s not let our jealousy overwhelm our good sense.
Its not about hate. It’s about running a studio like drunk sailors with other people’s money. Eventually it’s gonna bottom out. Flop after flop with no one to answer to. The Fighter was one of the few hits Relativity had this year (it would have been bigger if the marketing didn’t make it look like every other boxing movie)
AMEN brother. Having another cash rich buyer in this town is only a good thing.
Relativity is definitely good for the business — without it, far fewer films would be getting made. As far as the above post’s reference to The Fighter and David “O’Russell”, who cares what “O’Russell” thinks? In his illustrious 25 year career, “O’Russell” has directed a total of only 7 full length films (including one documentary), and one of the films (Nailed) was so bad that it was never finished or released despite being 95% completed (had it been half way decent another financier would have paid to have it finished, so don’t blame the lack of financing for its failure). He is very far from a box office sensation. And ask anyone involved in the first of his two commercial successes, and they will tell you it was the stellar cast of Three Kings that made it was it was, despite “O’Russell’s” temper tantrums and fighting on the set. As with Three Kings, the fact that The Fighter turned out pretty good is the result of an amazing cast (one of whom lived this film for a decade, and two others who were recognized by the Academy for their performances), not as the result of “O’Russell’s” efforts.
He is a B- talent and an F- human being. He should crawl back into the cesspool from whence he came.
“O’Russell” is a complete low life, physically fighting with one actor (Clooney) on set; having a complete melt down and screaming at Lily Tomlim over and over again, who was 65 years old at the time for God’s sake (http://www.youtube.com/watch?v=EMVILMo1Cq0); having actors quit in the middle of films he was directing; and the list goes on and on. And that is just on set. The stories of his off set behavior make his on set activities look like those of a choir boy. To the extent people know him, he is one of the most disliked people in Hollywood, and rightfully so. Only in Hollywood can such bad behavior be tolerated. Relativity does bear some responsibility for enabling this bad guy. In all other regards, however, Relativity is a significant asset to Hollywood.
Personally, I don’t root for any company’s failure, but when someone points out something that is unfortunate and true, it doesn’t mean they have a desire for it to be true. They are just pointing out something is true. There is no emotion attached to it. Savoy, Orion, Relativity, etc. These places come and go. They win Oscars and go bankrupt. This is the cycle of money that comes to town from Japan, from Germany, and now from hedge funds. It all disappears the same way.
Don’t attack someone for being honest by suggesting they have an agenda – Perhaps their eyes are more open than you want yours to be.
David is not Irish. It’s “David O. Russell”. The “O” is for his middle name. Details, details, details….
Even then, its still profitable. If you’re piling on Relativity, Skyline is a bad example considering the flops of Warriors Way and that Wes Craven stinker.
When anything is too good to be true, guess what?
Not rooting for anyone’s failure. And I hope I’m wrong, but, from what I’ve seen of their numbers, I will not be shocked if the handcuffs show up.
Great news!
GREAT TO SEE NICE PEOPLE LIKE RYAN KAVANAUGH & TEAM RELATIVITY #WINNING MAY THEY CONTINUE INNOVATING & #WINNING EVEN MORE IN THE FUTURE
Nikki,
Please explain why Elliott is the “most patient of financiers”… or is this just blanket cynicism on your part?
Until I read these postings I had no idea that Relativity invented foreign presales and that any doofus can make money in the movie business even when the films are dead on arrival opening weekend.
The money is froth from the stock market thanks to QE2. This is Bernanke’s trickle west theory. If the Fed ends QE2 on June 30, it’s over.
its good for the business in a time of need. everybody stop being a little pussy baby and just be positive for a second. redirect the jealousy and negativity into good content and fresh ideas. then submit them to relativity. everyone wins. the world keeps turning.
I love people who call the people they disagree with “little pussy baby’s”. It makes them so credible. I’m positive. I’m positive that buying sovereign debt for pennies on the dollar is much more profitable than investing in Fighting, The Taking of Pelham 1 2 3, Land of the Lost, Public Enemies, The Ugly Truth, Funny People, A Perfect Getaway, 9, A Serious Man, Love Happes, Couples Retreat, Cirque du Freak, Nine, and Brothers. Run the monte carlo simulation on Relativity’s slate and you come up with Orion Pictures. Pointing out the truth doesn’t make you negative – it makes you honest. Trust me: I’m not the least bit jealous. Nor will you be in the next three to four years.
Three to four years? You’re generous. My guess, and this is based on inside information, is one to three.
I agree that there is some good that Relativity is doing by constantly acquiring new capital, however it will be interesting to see how they really affect the industry when they go belly up.
Even when somebody make’s a shitty movie it circulate’s some money through the Hollywood machine. I worry more about shit like job’s being outsourced,( I’d call it GREEDSOURCED ), and all the other “creative” bullshit that’s turning economy’s into rubble. Without people buying the product, the industry is fucked royal. The latest projection’s I heard say the U.S. job market will suck for at least the next 2 to 5 YEAR’S. Having more player’s in the game might help the overall economy by moving dollar’s around. Go Relativity.
Wonder how many mai tai’s Kavanaugh was sipping on while watching the “take me home” numbers come in from his house on Maui! Whose head is going to fall for this one? Pete Adee is definitely not having a good weekend.
I predict a long day of meetings tomorrow in Malibu with MJ and Bertram!!!