by Jeff Spivack

---

HISTORY

Founded in 2004 by industry icon Ryan Kavanaugh, Relativity Media produces and distributes film, television, music, sports, and fashion globally.  The company’s diverse portfolio and nontraditional business model distinguish it amongst its competitors.  For the first five years of its existence, Relativity Media was primarily a finance and film funding company, without an actual studio or film producing division.[1]  In January of 2009, Relativity Media acquired Rogue Pictures from Universal Pictures  for $150 mil and in doing so, became a fully outfitted movie studio.  From this point on, the studio began producing its own films in its own studios, adding more films to its release schedule each successive year.[2]  In an effort to further expand their operation, in 2010 the company took over the 45-person marketing and distribution team of Starz’s Overture Films.[3]  To date, Relativity Media’s film studios have produced and distributed over 30 films.  The company has continuously grown, and has built a varied and multi-faceted business that delves into a number fringe markets, though in recent years analysts have remarked that Relativity’s performance may be slacking.  2014 marks the company’s ten year anniversary.[4]

 

---

 

Key Executives

The founder and CEO of Relativity Media, Ryan Kavanaugh, quickly and unexpectedly rose to prominence in the industry.  His first notable accomplishments came in the form of successful and original film financing arrangements which he organized for Universal, Warner Bros., Sony, and other film studios.  Early in his career, industry pundits thought he might have an early retirement given a DUI and probation violation he acquired during his initial successes, but he quickly turned things around and has been scandal free for the past few years.[5] In founding Relativity Media in 2004 with Lynwood Spinks, Kavanaugh managed his company in a way that is often compared to the analytical methods exhibited in the film “Moneyball”.[6]  Kavanaugh is often the recipient of industry awards and accolades for his original approach and unmitigated success.  In addition to his professional successes, Kavanaugh has participated in major philanthropic pursuits, founding several charitable organizations and committing large donations to charities that focus on children such as The Art Of Elysium.[7]

 

President of Relativity Media, Tucker Tooley, joined the staff in 2007 as the President of Worldwide Production.  Before accepting a position at Relativity Media, Tooley had extensive film industry experience, previously working as president of Tooley Productions as well as Creative Executive at Interlight Productions.[8]  In 2011 Tooley became the President at Relativity Media and has since been the producer and executive producer of some of Relativity’s most successful films.  He also played a large part in the company’s 2009 transition from film financier to film studio and will be a major player during the studio’s eventual IPO.[9]

---

 

Financials

Relativity media has participated in the financing, distribution, or structuring of over 200 films.  As of 2014, box office revenue has generated over $17 billion worldwide for the company.  Much of the relatively small film studio’s success can be attributed to its performance in foreign markets.[10] Relativity Media’s most successful release to date was the 2011 Immortals, which grossed $84 million domestically and $143 million in foreign markets.[11] Theatrical releases account for only 60% of Relativity’s revenue, indicating a highly diversified revenue stream.  The company will continue this campaign and plans to have 50% of its revenue coming from alternate sources by next year[12]

Initial Public Offering

Beyond its slate of film releases this year, Relativity has made substantial steps towards a planned upcoming IPO by attempting to raise capital and grow its business through acquisitions, such as its $1.1 billion bid for Makers Studios which it eventually lost to a competing bid by the Walt Disney Company.  Sources believe that the planned IPO will value the company somewhere between $6 billion and $10 billion. CEO Ryan Kavanaugh’s strategy for the IPO preparation is one of diversification, which he hopes will entice investors by offsetting the volatile nature of film markets.[13]

Additionally, Relativity has made strategic partnerships with multiple Chinese companies, and has publicly suggested that it may list its stock in both New York and Hong Kong.  Its largest partnership will be with Chinese broadcaster, Jiangsu, with which Relativity will co-finance, produce, and distribute translatable content for both economies.[14]  Kavanaugh stated the following in regards to his recent dealings in China.

We view China as being as important as the United States for Relativity. We’ve put a big bet on China, and the partnerships we announced today will further strengthen the robust foundation we have built in China.[15]

Other moves, such as plans to refinance their debt and the hiring of attorney Carol Genis make it clear that Relativity Media will likely go public within the next 12 months. Below, Kavanaugh explains his decision to hire Carol Genis.[16]

I have worked closely with Carol for more than a decade, relying on her sound counsel. She is an incredibly talented executive with an intimate understanding of our business and her experience and insight will prove vital as we prepare for an IPO[16.5]

 

---

Theatrical Releases

Relativity Media’s 2013 season was less then desirable, returning only $242, releasing a total of 9 films by the end of the year.[17]   Jason Dietz from Metacritic.com, a film performance rating site, had this to say about Relativity’s 2013 season.

Relatively speaking, Relativity performed horribly with critics in 2013, earning negative notices for more than half of its releases. The studio did score some hits, none bigger than the Nicholas Sparks adaptation Safe Haven, which grossed nearly $100 million worldwide against a $28 million budget. But there were also numerous duds, including animated family film Free Birds, drama Out of the Furnace, and thriller misfire Paranoia[18]

Relativity released 7 new films during the 2014 season, commanding 2.0% of the market share.  As of November 30th, Relativity’s total gross for the 2014 season amounts to $181 million.  Below are Relativity Media’s 2014 releases in descending order of highest grossing to lowest grossing.  Hold your cursor over the movie poster to see the film’s Box Office gross.  Click the poster to read a synopsis and access cast and crew information about the film on IMDb.com[19]

The Releases

References

[1] About Us. Retrieved November 24, 2014, from http://www.relativitymedia.com/About.aspx

[2] Cieply, M. (2009, January 4). Universal Sells Rogue for $150 Million. The New York Times. Retrieved November 24, 2014, from http://www.nytimes.com/2009/01/05/business/media/05rogue.html?_r=1&

[3] Finke, N. (2010, July 23). Relativity Takes Over Overture from Starz. Retrieved November 24, 2014, from http://deadline.com/2010/07/relativity-takes-over-overture-from-starz-56058/

[4] Riley, J. (2014, May 6). Relativity Media Celebrates 10th Anniversary (VIDEO). Retrieved November 25, 2014, from http://variety.com/2014/film/spotlight/relativity-media-celebrates-10th-anniversary-video-1201172992/

[5] About Us. Retrieved November 24, 2014, from http://www.relativitymedia.com/About.aspx

[6] Pomerantz, D. (2013, May 6). Why Ryan Kavanaugh Is Now The Most-Watched Man In Hollywood. Retrieved November 25, 2014, from http://www.forbes.com/sites/dorothypomerantz/2013/04/17/why-ryan-kavanaugh-is-now-the-most-watched-man-in-hollywood/

[7]Philanthropy. Retrieved November 25, 2014, from http://www.relativitymedia.com/Philanthropy.aspx

[8] Tucker Tooley. Retrieved November 26, 2014, from http://investing.businessweek.com/research/stocks/private/person.asp?personId=118221022&privcapId=24439893

[9] About Us. Retrieved November 26, 2014, from http://www.relativitymedia.com/About.aspx

[10] About Us. Retrieved November 26, 2014, from http://www.relativitymedia.com/About.aspx

[11] Immortals. Retrieved November 26, 2014, from http://boxofficemojo.com/movies/?id=warofgods.htm

[12] Atkinson, C. (2014, June 12). Relativity Media to close $1B pre-IPO funding. New York Post. Retrieved November 26, 2014, from http://nypost.com/2014/06/12/relativity-media-to-close-1b-pre-ipo-funding/

[13] Sakoui, A., & Erlichman, J. (2014, April 14). Relativity Media Sends offer for Makers Studios Over Disney. Retrieved November 27, 2013, from http://www.bloomberg.com/news/2014-04-14/relativity-media-sends-offer-for-maker-studios-over-disney-s.html

[14] Sakoui, A., & Erlichman, J. (2014, June 19). Relativity Media Plans to Raise Capital Ahead of Planned IPO. Retrieved November 7, 2014, from http://www.bloomberg.com/news/2014-06-19/relativity-media-plans-to-raise-capital-ahead-of-planned-ipo.html

[15] Coonan, C. (n.d.). Relativity CEO Ryan Kavanaugh: ‘China Is Just as Important to Us as the U.S.’ Retrieved December 1, 2014, from http://www.hollywoodreporter.com/news/relativity-ceo-ryan-kavanaugh-china-712036

[16] Mcnary, D. (2014, September 2). Ryan Kavanaugh’s Relativity Continues Prepping for IPO, Taps Managing Director. Retrieved November 27, 2014, from http://variety.com/2014/film/news/ryan-kavanaughs-relativity-ipo-managing-director-1201296042/

[16.5] Mcnary, D. (2014, September 2). Ryan Kavanaugh’s Relativity Continues Prepping for IPO, Taps Managing Director. Retrieved November 27, 2014, from http://variety.com/2014/film/news/ryan-kavanaughs-relativity-ipo-managing-director-1201296042/

[17] Studio Market Share. Retrieved November 28, 2014, from http://boxofficemojo.com/studio/?view2=yearly&view=company&p=.htm

[18] Dietz, J. (2014, January 23). Metacritic’s 5th Annual Movie Studio Report Card. Retrieved November 28, 2014, from http://www.metacritic.com/feature/film-studio-rankings-2014

[19] Relativity. Retrieved November 28, 2014, from http://boxofficemojo.com/studio/chart/yr=2013&view=company&studio=relativity.htm

Image Sources

[1*]Snider, M. (2012, May 22). Relativity Media Logo. Retrieved November 30, 2014, from http://www.geekfore.com/?attachment_id=1987

[2*] “The November Man” Premiers in Hollywood. (n.d.). Retrieved November 30, 2014, from http://www.zimbio.com/pictures/aOUGAlyXxtJ/November Man Premieres Hollywood/qlYI0FI9yDa/Ryan Kavanaugh

[3*] Huver, S. Tucker Tooley Helps Stars Make it Big Read more at http://la-confidential-magazine.com/living/articles/its-all-relativity#KXq4xRUfDqI5bB4u.99. Retrieved November 30, 2014, from http://la-confidential-magazine.com/living/articles/its-all-relativity

[4*] Atkinson, C. (2014, June 12). Relativity Media to close $1B pre-IPO funding. New York Post. Retrieved November 26, 2014, from http://nypost.com/2014/06/12/relativity-media-to-close-1b-pre-ipo-funding/

[5*] Mcnary, D. (2014, September 2). Ryan Kavanaugh’s Relativity Continues Prepping for IPO, Taps Managing Director. Retrieved November 27, 2014, from http://variety.com/2014/film/news/ryan-kavanaughs-relativity-ipo-managing-director-1201296042/

[6*] http://www.imdb.com/title/tt2183034/

[7*] http://www.imdb.com/title/tt2172934/?ref_=fn_al_tt_7

[8*] http://www.imdb.com/title/tt2388715/?ref_=nv_sr_1

[9*] http://www.imdb.com/title/tt1972779/?ref_=nv_sr_1

[10*] http://www.imdb.com/title/tt2402157/?ref_=nv_sr_1

[11*] http://www.imdb.com/title/tt1430612/?ref_=nv_sr_1

[12*] http://www.imdb.com/title/tt3125324/?ref_=fn_al_tt_1