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UPDATE, 1:38 PM: Rhythm & Hues confirms Deadline’s original reporting that it will be filing for Chapter 11 tonight. Here’s the statement just released by President of Film Division Lee Berger:
“Tonight R&H is filing for Chapter 11 reorganization in the U.S. Bankruptcy Court and hope to be in front of a Bankruptcy judge in the next couple days. In the meantime, all of our offices remain open, our clients are aware of the process; we have obtained commitments for financing to complete projects in house at the quality level the studios have come to expect. Following the filing, R+H will be seeking to secure financing for future growth. I believe that we are going to come out of this situation stronger, more efficient, and as prolific as we are now.”
PREVIOUSLY, SUNDAY PM: Oscar-nominated, VES-winning and Annie Award-winning animation studio Rhythm & Hues will be formally filing for bankruptcy Monday morning, Deadline has learned. Within hours of winning the BAFTA for Special Visual Effects for Life Of Pi, the financially troubled company informed employees around 9 PM Sunday of the upcoming Chapter 11 filing, insiders say. Many Rhythm & Hues employees were also told by management not to show up to work Monday. On Friday, the company, headquartered in El Segundo, preceded its bankruptcy filing news by announcing to workers that paychecks would be delayed indefinitely.
While the paperwork has not been formally filed, it does seem like Rhythm & Hues is at least partially shuttering. Sources tell Deadline that production on contracted work for Warner Bros’ Seventh Son, Fox’s Percy Jackson 2, and Universal’s R.I.P.D. has been halted, while work on Warner Bros’ 300: Battle of Artemesia may have also been affected. The three studios attempted to keep Rhythm & Hues alive with a joint $21 million infusion before VFX company Prime Focus stepped in as a potential buyer. That deal is now uncertain.
The veteran VFX house (Babe, The Golden Compass) is nominated for the Academy Award for Best Achievement in Visual Effects for its work on Life Of Pi and Snow White And The Huntsman. On Tuesday, Rhythm & Hues nabbed four top prizes at the 11th annual VES Awards for Life Of Pi, where director Ang Lee accepted the VES Visionary award by paying tribute to his VFX team.
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I was 13 years in the effects business at Sony Imageworks and Disney Animation before the declining industry drove me out a year ago. Luckily I was able toreturn to the aerospace industry from which I’d originally come but a LOT of FX workers don’t have that luxury. The state of California and the studios are driving the FX industry right to other states (New Mexico, Texas) and to other countries (Canada, India). These places are working WITH the industry by providing incentives and reasonable taxation; California treats the FX industry as a “cash cow” to be relentlessly milked until it eventually dies (on some future politician’s term). And the studios want more and more and more for their FX dollar but don’t want to pay for it. I loved working in the industry but after transitioning from 12 years in a staff position, I just couldn’t count on it as a reliable job once I, like SOOOO many other workers, were reduced to project hires with minimal benefits and unreliable continuity.
WHAT ABOUT THE PEOPLE THEY EMPLOY? ONE DAY YOU HAVE A JOB, AND THE NEXT YOU DON’t. IF ALL THE HIGHER UPS TOOK CARE OF THEIR EMPLOYEES,INSTEAD OF LINING THEIR OWN POCKETS, MAYBE THEY WOULD STILL HAVE THEIR JOBS.
Lining their own pockets?? John Hughes?? You obviously know nothing about the company or the state of the VFX industry. Stop posting, dummy.
“woodrow,” it seems you’re one of the people that, that happened to and if you think that’s how it went down then good riddance to you buddy, you’re an idiot.
This happens because execs with no clue about film making make impossible demands on projects that never should have seen the light of day. They make places fail and then they have golden parachutes and the actual film makers get screwed. Local 700 should protect the VFX people and make studios sign union contracts to prevent abuse.
well, at least i didn’t have to wade through a lot of insightful comments to get to the “blame the studios” section.
Maybe outsourced visual effects isn’t really a business. we’ll find out whether anyone is willing to back a new start up, or if the work moves in-house.
and sadly, the talented people who work here and at other competitors need to pay more attention to who is running their companies and whether the contract bidding outcome doesn’t cover the costs.
and i’m aware that this is a personal tragedy for a number of people, and there is no glossing over that. finding a party to blame quickly might not be the best move though.
It happens because the employees suck any profits out of the company in the form of outrageous benefit costs
unfortunately the vfx and post production industries are spirialling down, because of the lack of incentives, underbidding, studios not paying vendors for sometimes up to 120 days (causing vendors to take out loans to pay their employees), outsourcing for cheaper labor constantly fighting for your next project(s) no matter how well you did on the previous projects. the studios despite all the money they make are unwilling to pay fair wages and costs, really only the studio heads make real money not matter how hard and or talented you maybe. unless you are in the top percentage, a typical studio worker will never be paid his worth….the business created by hollywood will ultimately leave hollywood and defeat itself by wanting larger and larger margins of profit, very very sad
Everyone is blaming the studios, but what about Rhythm’s responsibility? They wanted out, and they got out. That’s how this shit goes down.
Work to survive so that you can survive to work ……. strategy is bound to fail and it has all the times.
Its always the big bad producers and studios taking advantage… maybe it is just bad management at R&H
Now you are getting it!!!
Or maybe the scripts will actually have to be good from now on. Hmm.
Globalisation is certainly a problem for Hollywood labour. But then again, why should anyone expect that all film production and post production work belongs in LA, California or even the US?
The Hollywood studios are owned by multinational shareholders and earn the majority of their revenues outside the US. Why on earth shouldn’t hard-working folk in other countries have a piece of the work?
As to subsidies and the WTO, the US is no paragon. It has plenty of federal and state-level subsidies. Louisiana, anyone?
21 million roflmao. And then the industry pay Robert Downey shit face Jr 50mill to do basically nothing. The idustry had to reduce the salary of everyone else to pay him.
Well I see it differently. I see it as an Intellectual property issue. The only thing studios do well anymore is hold their IP.
Lucas just sold for Billions. Why? He owns the ideas… R&H, DD and others are the victims of “vendor bashing”. If you don’t own the idea, then you are indeed in a bidding war for the work. And hence a race to the bottom.
It is so sad that R&H and DD who are so vital to success of great movies (Life of Pi) are abused and left holding the bag. You can’t blame the artists or the management for doing great work. You can’t blame them for trying to garner the work by bidding against the competition.
You can however share some of the blame as an industry for allowing true artistry to be treated as a commodity.
R&H had to out source some of the work due to the lousy work on the effects and time frame.. So I wouldn’t put all the blame on prices, just lack of quality control..
The higher ups in Hollywood seem to have a mind set of “You need us more than we need you.” It’s the same attitude they have toward writers, so it doesn’t surprise me that it’s the same attitude they have with VFX crews who are equally as important.
Imagine a film industry without “Avengers,” “Harry Potter,”"Transformers,”"Spiderman,”"Batman,”"Superman,”"Avatar,” and “Pirates of the Caribbean.” The box office receipts would be miserable without them. They’re literally keeping Hollywood afloat. Without good VFX each of these films would have failed.
Makin profit isn’t the issue. Everyone wants profit including the vfx companies. The studios and producers want profit and high quality for pennies. That’s why companies are shutting down.
Why would you blame the employees that are working 100 hour days to meet deadlines.
Studios don’t have a future. They will be replaced by more tech savvy companies with streamlined workflows, delivering to audiences on demand.
Lets look at history to see what might be in store for the future. If you live in LA you can’t help but notice the big studio lots. When built the studios had everyone on contract. Producers, Directors, actors, writers, set designers, etc. all on contract. The studios were self contained empires. Fast forward to today and anyone can come on any lot and rent anything for a day a month or a year. Everyone is free lance and works job to job. Try to find a major recording studio in any city. I know studio owners who kept the actual physical studio only for clients to see even though most of the tracks were recorded in the musicians homes and emailed to the studio for mixing. Recording studios are now spare bedrooms. Maybe the future of VFX is a bunch of artist with their own Alienware or gamer rigs that show up at a warehouse and do their thing or don’t show up at all and do it from their homes. Then like the rest of the industry the owners/agents don’t need 100,000sq. Ft. Of space, plus clean power plus health and welfare, plus lunch, plus an HR dept, etc. The artist take care of themselves, everyone is freelance and overhead is cut by a significant margin. The artist could be paid by the task based on an industry standard. This isn’t the answer for all situations but why do you need to come to a facility to do roto
Bingo.
My friend was laid off on Friday just when his two week paycheck was due and they told him he wasn’t getting paid for the hours or any of his vacation pay. I told him to file a wage claim… chances are the CEO and other execs saved enough to make sure their multi-million dollar homes are paid up. While my friend worked in-human hours just to get stiffed and not he’s had to terminate his lease and move in with another friend because he can’t make ends meet.
This is just another example of the deal makers running off to the bank while the people that make it happen can barely make enough to survive in Southern California. The VFX industry needs to unionize!
Stormdude, I’m sorry, I understand your frustration but your oberservation isn’t correct. It is easy to fantasize that some how the people at the top of the process don’t suffer repercussions in these situations but that isn’t the case. I know these people and there are no multi million dollar homes involved. No one at R&H is lining their pockets at the expense of the “people that make it happen”. They all make it happen. The people at the very top have put a lot of their own money back into the business to keep it going in lean times and leveraged their lives to the bank in the bleakest of times. No one wins in these situations. Your friend should file a claim and let the process decide the equitable outcome but please leave the class envy out of it. As far as unions go the quickest way to completely destroy what is left of the industry is to demand more compensation where the studios have clearly demonstrated the willingness to go to the cheapest supplier, where ever in the world that is. Maybe VFX can be declared the next sweatshop industry. Most American shoes were once made in New England, most Furniture in the Carolina’s and most textiles in the south. Now all of those items as well as steel and appliances are made in China because they are produced cheaper there. If your friend made shoes we could have had this conversation 20 or 30 years ago but shoes would still be made in China today. At its peak Kodak was the biggest polluter in the US. It had to move its plants and thousands of jobs to Mexico to survive. With the advent of digital photography the chemical process thus the pollution ceases to be a problem. No one saw that there was a solution until digital technology became available. We can’t hide from or impede the global economy. We need to figure out a way to work with it by coming up with more efficiencies or technology to make us desirable. The most attractive option always wins.
But the government can do a better job at protecting the jobs that we do have.
Did you ever see Man in A Glass Booth with Maximillion Schell. What the VFX houses have allowed to happen, is like the innocent Jewish people,the peacemakers,allowing themselves in masses to be herded on to those trains;outnumbering the Natzi soldiers 100 to 1!
I hear a lot of,reactionary commentary.Who will take a stance to be proactive? The film industry can not NOT live without your talents and hard work. And unless you can win a place IN the film union immediately, many more companies will disappear. You shouldn’t need a union for your industry to fight together for what is fair! Seems to me you ought to hold all the cards if you join forces. Hollywood and the entire film industry would find it easier to survive without actors than without you people.Just take 1 film and edit out all the VFX,CG possible and see the skeleton you’d have left. Signed,
Mom of a compositor who works those 70 hour weeks!
ElGorcho, I hope for your sake your comment was sarcastic. The government can never protect your job or mine if some one from overseas will do it with equal quality for less. If the government was to step in to demand that a private company do it’s business the way the government wants it done we should all be outraged. The government isn’t the answer and in most cases just makes things worse. Every minute you waste on waiting for the government to help you is a minute you are not helping yourself. The best defense is to get a thorough understanding of why things are the way they are and then working within that system.