Relativity Media

by Noah Mintz

Relativity Media Logo [1]

RELATIVITY MEDIA
9242 Beverly Blvd #300, Beverly Hills, CA
http://relativitymedia.com

OVERVIEW:

Founded in 2004 by venture-capitalist and movie enthusiast, Ryan Kavanaugh, Relativity Media has and continues to produce, distribute, and structure financing for more than 200 films through their Relativity Studios division. These films have successfully accumulated more than $17 billion of revenue in the worldwide box office and generated over 60 Academy Award nominations [2]. Upon its inception, Relativity Media was widely praised for reimagining the Hollywood landscape in their buying of “textured, mid-budget films… To bankers, Kavanaugh appeared to have cracked the code, having come up with a way to forecast a famously unpredictable business by replacing the vagaries of intuition with the certainties of math” [3].


KEY EXECUTIVES:

RYAN KAVANAUGH, Chief Executive Officer [4]

RAMON WILSON, Interim President [4]

CAROL GENIS, Managing Director [4]


FINANCIALS & RESTRUCTURING:

After six years of financing and distributing high-profile films for major film studios like Sony Pictures Entertainment and Universal Pictures, Relativity Media began making and distributing their own movies in 2010 with their first original film, Season of The Witch (2010). Many industry professionals predicted the company’s downfall after witnessing Kavanaugh’s proven history of financial irresponsibility [5]. Yet Relativity persevered, dealing out successful high-grossing films like Immortals (2011 – $83.5 million), Limitless (2011 – $79.3 million), and Safe Haven (2013 – $71.3 million) [6]. Ryan Kavanaugh’s algorithmic, low-risk business model finally proved to be successful. With over $560 million of assets by the summer of 2015, Relativity seemed relatively untouchable. Yet when an outstanding $330 million in debt to various lenders came due in July of the same year (not to mention the $1.8 billion of debt due in the following years), Relativity was forced to file for Chapter 11 bankruptcy protection on July 30th in New York State Bankruptcy Court [5].

Relativity’s Ryan Kavanaugh Breaks Silence, Points Fingers in Emotional Post-Bankruptcy Interview [5]

With this major speed bump in Kavanaugh’s plan for the future of Relativity Media, the production company came out of the 2015 fiscal year on a surprisingly high note: ranking 12th amongst all other production companies in total market share with 0.6%, and grossing $74.2 million on four movie releases (making them the third largest mini-major production company) [7]. Similarly, things began to look up for Relativity Media at the start of this Spring when United States Bankruptcy Judge Michael Wiles confirmed a reorganization plan for Relativity on February 8th, 2016. With an offer from Trigger Street Productions‘ notable industry moguls Kevin Spacey and Dana Brunetti, Relativity was set to have their debt reduced by over $630 million [8]. Although the deal included Relativity losing their television, fashion, and sports agency divisions to various lenders as a partial settlement for their egregious debt, the film division, Relativity Studios, was granted approval to release their upcoming films MastermindsThe Disappointments RoomBefore I WakeKidnap, and The Strangers 2 upon successful completion of the deal. Just one month after the negotiation was proposed on the other hand, Spacey backed out, citing his busy acting schedule as an excuse for his inability to serve as Relativity Studio’s new chairman [9][10]. Brunetti did remain on board, however, and now serves as the studio’s President of Production in both film and television operations [11]. After multiple other financial dealings fell through including the unsuccessful Trigger Street negotiation, Relativity entered bankruptcy court once again on March 19th, now with only $16 million of financial help from various capital groups, as opposed to the $100 million Kavanaugh had pledged upon filing Chapter 11 [10].

Image from The Wrap’s “Ryan Kavanaugh’s Relativity Media Declares Chapter 11 Bankruptcy” [13]

On top of Relativity’s fruitless financial dealings, news broke of Relativity Media’s apparent ‘Ponzi Scheme’ in late March. According to Variety magazine’s online article, “The New York investment firm Colbeck Capital aided and abetted Relativity Media’s fraudulent acquisition of a crucial film-release loan — money that was misspent on corporate expenses and to support the high-flying lifestyle of Relativity founder Ryan Kavanaugh” [9]. This claim by RKA Film Financing seeks over $110 million in damages, and has the potential to put Relativity further in debt if found guilty [9].

Amongst Relativity Media and Kavanaugh’s slew of shortcomings and failures to fulfill many of its early bankruptcy pledges, Judge Michael Wiles shockingly granted Relativity Media approval to exit bankruptcy status after many negotiations and a successful $400 million refinancing plan with UK investment firm, Maple Leaf Films (of Maple Leaf Capital Group) [12]. While the investment company has an oddly shady past and limited credits in the film industry, Maple Leaf Films proved to be a significant life saver for the drowning Relativity Media. In the meantime, as they begin the post-bankruptcy reorganization phase, Relativity must face RKA Film Financing and FTI Consulting in court. In the coming months, Relativity will attempt to resolve RKA’s ‘Ponzi Scheme’ claim against the company, and FTI’s fee dispute that began in the summer of 2015 and could cost Relativity an added $4 million of debt [9].


PROJECTION & CONCLUSION:

Upon Relativity Media’s ultimate emergence from bankruptcy, Ryan Kavanaugh and his newly diminished team of industry professionals will continue in their attempt to regain the reputation that was lost in the summer of 2015. With the help of Maple Leaf Films’ convenient endorsement and Judge Wiles’ thoughtful compassion in bankruptcy court, Relativity looks to rebound with its upcoming films Masterminds (which was postponed from its original 2015 release), The Disappointments RoomBefore I WakeKidnap, and Strangers 2. After a full year without a release, Relativity needs a break. While these upcoming releases do not necessarily ensure a future of success for Relativity, the big-named high-profile comedy, Masterminds, looks to be the company’s one saving grace. With Kristen Wiig, Zach Galifianakis, Owen Wilson, and Jason Sudeikis as the headlining cast, the 2016 comedy earned a 96% in the “Want to See” category on Rotten Tomatoes [14]. While it falls under the throw away genre of stupid comedies, it is likely to make Relativity some much needed cash. Check out the trailer below.

[17]^

There is no certainty when it comes to the future of Ryan Kavanaugh and his brainchild, Relativity Media, but on Relativity’s website dedicated to the company’s reorganization, the CEO and Chairman of the board said it best. While their shaky past two years have further diminished the reputation of a company once recognized as a revolutionary force in the film industry, Kavanaugh promised that “the Relativity that emerges from the Chapter 11 process will be better capitalized and have greater financial flexibility” [15].

Finally, here’s a sneak peek of Realtivity Media’s upcoming film slate directly from their website.

Screenshot of Relativity Media's upcoming film slate direct from their corporate website [16].

Screenshot of Relativity Media’s upcoming film slate direct from their corporate website [16].


SOURCES CITED:

[1] Logopedia. “Relativity Media – 2013 (Free Birds).jpg.” Wikia. Retrieved on: April 22, 2016.

[2] “Relativity Corporate Site – Leadership: About.” Relativity Media. Retrieved on: April 22, 2016.

[3] Wallace, Benjamin. Janruary 25, 2016. “The Epic Fail of Hollywood’s Hottest Algorithm.” Vulture Magazine. Retrieved on: April 22, 2016.

[4] “Relativity Corporate Site – Leadership.” Relativity Media. Retrieved on: April 22, 2016.

[5] Siegel, Tatiana. August 05, 2015. “Relativity’s Ryan Kavanaugh Breaks Silence, Points Fingers in Emotional Post-Bankruptcy Interview (Exclusive).” The Hollywood Reporter. Retrieved on: April 22, 2016.

[6] “Box Office By Studio – All Time: Relativity.” Boxofficemojo.com. Retrieved on: April 22, 2016.

[7] “Studio Market Share – 2015.” Boxofficemojo.com. Retrieved on: April 22, 2016.

[8] Gardner, Eriq. February 08, 2016. “Judge Officially Confirms Relativity’s Reorganization Plan.” The Hollywood Reporter. Retrieved on: April 22, 2016.

[9] Rainey, James. March 10, 2016. “Colbeck Capital Aided Ryan Kavanaugh’s ‘Ponzi Scheme,’ Film Lender Claims.” Variety Magazine. Retrieved on: April 22, 2016.

[10] Rainey, James and Lang, Brent. March 15, 2016. “Without Kevin Spacey or New Equity, Relativity Now Must Face Judgment Day.” Variety Magazine. Retrieved on: April 22, 2016.

[11] Lang, Brent and Littleton, Cynthia. March 13, 2016. “Relativity Relaunch: Kevin Spacey Nixes Chairman Role, Dana Brunetti Sets Deal.” Variety Magazine. Retrieved on: April 22, 2016.

[12] Rainey, James. March 17, 2016. “Relativity Media Claims Lifeline From Obscure Maple Leaf Films.” Variety Magazine. Retrieved on: April 22, 2016.

[13] Cunningham, Todd and Donnelly, Matt. July 30, 2015. “Ryan Kavanaugh’s Relativity Media Declares Chapter 11 Bankruptcy.” The Wrap. Retrieved on: April 22, 2016.

[14] “Masterminds (2016).” Rotten Tomatoes. Retrieved on: April 22, 2016.

[15] “Relativity Corporate Site – Reorganization.” Relativity Media. Retrieved on: April 22, 2016.

[16] “Relativity Corporate Site – Films.” Relativity Media. Retrieved on: April 22, 2016.

[17] Movieclips Trailers. “Masterminds Official Trailer #1.” YouTube. Retrieved on: April 22, 2016.

Relativity

Relativity Media Logo

Relativity Media Logo

Background

Relativity Studios is the film branch of the multimedia company, Relativity Media LLC, or Relativity. The largest division of the company, Relativity Studios has produced, distributed, or financed more than 200 films, generating more than $17 billion in worldwide box office revenue and garnering 60 Oscar nominations [1]. Considered the largest min-major film studio, Relativity Studios has continued to feed founder Ryan Kavanaugh’s vision to take advantage of and help fix inefficiencies in the market. The studio is dedicated to churn revenue and it employs a series of risk-assessing algorithms to help filter out risky projects. Relativity has operated with the mentality that they have taken the risk out of the film industry and takes pride in their innovative approach to a conservative industry [2].

History

Founded by Ryan Kavanaugh in 2004, the company started as a middleman, setting up multi-picture deals with studios and then finding banks such as Citigroup and Merrill Lynch to sponsor them. By 2007, Kavanaugh had started developing a reputation of being a bit impractical with his methods and investors slowly started dropping out. However, Elliott Management stepped in and took a minor stake in the company providing the Relativity Studios access to around a billion dollars in credit [3]. With their own source of money, Relativity became more independent. After a notably successful period through 2009, Relativity Media has since struggled.Relativity’s financial debt accumulated and they spent most of 2015 pushing back loan payments and missing new deadlines. On July 30th, Relativity Media filed for Bankruptcy and since then has been faced with an uphill battle to keep the company running.

Bankruptcy

Ryan Kavanaugh Portrait at Relativity in Beverly Hills, CA on Wednesday, April 2, 2014 (Alex J. Berliner/ABImages)

Ryan Kavanaugh has been getting the company out of tricky situations since it’s beginning. After a string of box office flops, Relativity has found itself in a $1.2 billion debt and as of July 30th the solution has been Chapter 11 of the United States Bankruptcy Code. The bankrupcy excludes: Relativity Sports, Relativity EuropaCorp Distribution (RED) and Relativity Education [4]. Chapter 11 allows for Relativity to restructure itself in hopes of reaching a point to stand on its feet; however, all decisions must be approved by a judge. Before reconstruction began, Kavanaugh auctioned off Relativity in October in hopes to pay off the debt. A group of creditors called Stalking Horse Bidders first offered $250 million for the whole company; then later withdrew to only $125 million to take Relativity Television, the company’s most successful branch of operation [5][6]. shortly after, Kavanaugh lead a group of investors to make a deal that would allow him to take control of the studio and with time, pull the business out of bankruptcy [7].

External Conflict

Despite his ability to save Relativity again and again, a few have spoken out against Kavanaugh’s ability to run the company Continue reading

Relativity

by Nicholas Matarazzo
Relativity Media Logo

[1] Relativity Media Logo

HISTORY

Relativity Studios, or simply Relativity, consists of the film and television divisions of Relativity Media LLC. Founded by Ryan Kavanaugh in 2004, the company has produced, distributed and structured financing for over 200 feature films garnering 60 Oscar® nominations. Led by President and Chairman Tucker Tooley and President of Production Robbie Brenner, Relativity has released No. 1 box office openers such as Immortals, which grossed $83 million domestically [2], and produced Academy Award Winning films such as the Internet biopic The Social Network (2010) and The Fighter (2010).

[2] "The Social Network" is one of Relativity's most critically acclaimed films, winning Best Adapted Screenplay, Best Original Score, Best Film Editing at the 2011 Academy Awards.

[3] “The Social Network” is one of Relativity’s most critically acclaimed productions, winning Best Adapted Screenplay, Best Original Score, Best Film Editing at the 2011 Academy Awards.

Relativity produces films for large audiences both foreign and domestic, which provide entertainment for a wide variety of target audiences and demographics. With genres ranging from heart-felt romantic dramas to action packed, adrenaline filled thrillers, Relativity strives to bring premium feature films to theaters all over the globe. Some of Relativity Studios’ most successful films include Limitless (2011), starring Bradley Cooper, and Mirror Mirror (2012), starring Julia Roberts.

In addition to film production Relativity also houses both financing and distribution divisions, equipping itself as a fully fledged vertically integrated company. The company has the resources to finance, produce and distribute a film from start to finish and has done so even more effectively since 2010 when the company absorbed the marketing and distribution holdings of Overture Films.

 

KEY EXECUTIVES

Ryan Kavanaugh, CEO of Relativity Media

[4] Ryan Kavanaugh, CEO of Relativity Media

Tucker Tooley, President and Chairman of Relativity Media

[5] Tucker Tooley, President and Chairman of Relativity Media

[6] Robbie Brenner, President of Production of Relativity Studios

[6] Robbie Brenner, President of Production of Relativity Studios

 

 

 

 

 

 

 

 

FINANCIALS

Relativity ranks 9th in overall film distributor companies, owning 2.5% of the total market share as of April 12, 2015. The company’s total gross is $73.6 million with 4 films released thus far in 2015 [7]. Relativity has improved in market share from the previous year, ranking 9th with 1.8% market share and grossing $186.5 million with its 8 films that were released in 2014 [8]. Relativity saw a 22.7% decrease in gross between 2013 and 2014 due in large part to the lack of success of the McG action flick Three Days to Kill [9].

IN THEATERS

“Desert Dancer” (2015)

"Desert Dancer" is biographical drama based on the cultural repression of Afshin Ghaffarian, an Iranian dancer.

[10] “Desert Dancer” is biographical drama based on the cultural repression of Afshin Ghaffarian, an Iranian dancer.

The biographical story depicts the life of Afshin Ghaffarian, a dancer who fled Iran in 2009 due to cultural repression. The film originally debuted at the Cannes Film Festival in Cannes, France in May of 2012. In 2013, the distribution rights were acquired by Relativity at the American Film Market and the film was slated for release in the spring of 2015. In limited release, the film opened on April 10, 2015, in 23 theaters in the US. The film has a current domestic gross of just under $60,000, as of April 16th, 2015 and will move to expanded release on the 17th [11].  Andy Webster of the New York Times says “The fictionalized biopic “Desert Dancer” explores fascinating aspects of present-day Iran but suffers mightily from simplistic and sentimental tendencies” [12].

 

SPRING 2015 RELEASES

“Black or White” (2015) 

Starring Academy Award Winners Kevin Costner and Octavia Spencer, "Black or White" follows a young girl caught in a custody battle, mixed within racial qualms of two seemingly different families.

[13] Starring Academy Award Winners Kevin Costner and Octavia Spencer, “Black or White” follows a young girl caught in a custody battle, mixed within racial qualms of two seemingly different families.

The heart felt drama was released on January 30, 2015, and saw a domestic gross of $21.5 million. In it’s opening weekend, Black or White ranked third among weekend releases, opening in 1,823 theaters, and averaged $3,408 per theater, attributed to 28.9% of the total domestic gross. Against a production budget of $9 million, the film failed to make budget in its first weekend with a $6.2 million weekend gross [14]. The film received mediocre acclaim for it’s simple and overly-stereotypical characters, and failed to live up to the promised look at the diverse world the audience is brought in to. With a 37% rating on the website Rotten Tomatoes (from 83 reviews) [15], and 45 out of 100 rating on Metacritic [16], it appears that the “inspired by true events” drama garnered average reviews at best. Says the critic consensus on Rotten Tomatoes “”Black or White” has more on its mind than your average family drama, but the film’s approach to its thought-provoking themes too often lives down to its title.” [17]

“The Lazarus Effect” (2015)

Released on February 27, 2015, this horror-thriller starring Olivia Wilde, opened at No. 5 on the weekend box office. The Lazarus Effect, opened in 2,666 theaters; the film averaged $3,827 per theater and grossed a weekend total of $10.2 million which made up 40.1% of the total gross [18]. Despite a strong weekend opening against a production budget of $3.3 million, the film’s success was short lived due to poor critic reviews. Critical consensus on the popular website Rotten Tomatoes said “”The Lazarus Effect” has a talented cast and the glimmer of an interesting idea, but wastes it all on insipid characters and dull, recycled plot points” which is no surprise given its 14% rating [19].

UPCOMING

“Masterminds” (2015) 

Originally titled Loomis Fargo, and based on the true story of the 1997 Loomis Fargo robbery, in which a vault supervisor for the bank stole $17 million and fled to Mexico, Masterminds is the latest comedy from Napoleon Dynamite director Jared Hess. The film stars Zach GalifianakisOwen Wilson, Kristen Wiig, Jason Sudeikis, Ken Marino, Kate McKinnon, and Leslie JonesEastbound & Down producers Jody Hill and Danny McBride both worked on the script and executive-produced [20].

 PROJECTIONS FOR RELATIVITY

With few releases slated for in the first half of 2015 and even fewer in the coming months Relativity is looking at yet another decrease in total gross. Looking forward, it appears that the amount of pressure on such upcoming summer releases as Masterminds, Big Game, and Jane Got a Gun is becoming more apparent. It’ll be interesting to see how the rest of the year pans out for Relativity, heading into a shaky second quarter, after a not so strong first.

SOURCES

[1] Relativity Media Logo Relativity Media Retrieved April 10 2015

[2} Box Office by Studio: Relativity Box Office Mojo Retrieved April 10 2015

[3] The Social Network Movie Poster IMP Awards Retrieved April 10 2015

[4] Ryan Kavanaugh Relativity Media Retrieved April 10 2015

[5] Tucker Tooley Relativity Media Retrieved April 10 2015

[6] Robbie Brenner Relativity Media Retrieved April 11 2015

[7] Studio Market Share: Yearly Comparison Box Office Mojo Retrieved April 11 2015

[8] Studio Market Share: 2014 Box Office Mojo Retrieved April 11 2015

[9] Studio Market Share: 2013 Box Office Mojo Retrieved April 11 2015

[10] Desert Dancer Movie Poster Movie Insider Retrieved April 11 2015

[11] Gross Domestic Box Office Results: Desert Dancer Box Office Mojo Retrieved April 12 2015

[12] Review: Desert Dancer New York Times Retrieved April 12 2015

[13] Black or White Movie Poster Mixed Nation Retrieved April 12 2015

[14] Total Gross Box Office Results: Black or White Box Office Mojo Retrieved April 12 2015

[15] Review: Black or White Rotten Tomatoes Retrieved April 12 2015

[16] Review: Black or White Metacritic Retrieved April 13 2015

[17] Review: Black or White Rotten Tomatoes Retrieved April 13 2015

[18] Total Gross Box Office Results: The Lazarus Effect Box Office Mojo Retrieved April 13 2015

[19] Review: The Lazarus Effect Rotten Tomatoes Retrieved April 13 2015

[20] 2015 Preview: Masterminds Rolling Stones Retrieved April 13 2015

Relativity Media

By Trevor Bulger

Relativity Media

[1]  Courtesy of GeekForE.

Relativity Media engages in full-scale film and television production and distribution, music publishing, sports management and digital media.  Relativity Media has produced, distributed, or financed over 200 films and generated more $22 billion in box office revenue worldwide.  The company partners with and invests in other media-related companies, including a recent partnership with Major League Gaming (MLG). [2]  Currently, their film Free Birds is in theaters.

 

Executives:

 Ryan Kavanaugh  Tucker Tooley  Happy Walters  Gregory Shamo  Robbie BrennerRyan Kavanaugh  Tucker Tooley       Happy Walters    Gregory Shamo     Robbie Brenner
CEO                      President             Co-COO             Co-COO              Pres., Production

Ryan Kavanaugh is both the founder and Chief Executive Officer of Relativity Media.  He is a producer, and has been producer or executive producer of many of Relativity Media’s recent movies, including Out of the Furnace and The Family.

Tucker Tooley, as president of Relativity since 2007, oversees its daily operations, as well as marketing and distribution.  He was also producer of We’re The Millers, released in summer 2013.

Happy Walters, since 2012, has served as Co-Chief Operating Officer for Relativity.  He helps determine the direction that Relativity Media will go in future seasons and handles day-to-day operations.

Gregory Shamo oversees the corporate, business, and legal affairs of Relativity Media, as well as assisting the day-to-day operations of the company.  He has helped lead several of the major deals that Relativity Media has made, including the distribution agreement they have made with Twentieth Century Fox.

Robbie Brenner, the President of Production, leads the production team in filmmaking.  She has overseen a large number of the films produced by Relativity Media, and led the acquisition of Joseph Gordon-Levitt’s Don Jon. [3]

 

Recent Releases:

Don JonDon Jon Official Trailer
Don Jon
, directed by and starring Joseph Gordon-Levitt, is a comedy about Jon, a rather stereotypical stud who can get a different girl every weekend, and Barbara, a girl raised on Disney looking to find her Prince Charming.  It focuses around their attempt to find intimacy despite their differences and the fantasies of the culture of the time. [4]

Don Jon opened on 27 September, and made a domestic gross of over $24 million, on a production budget of only $6 million, reaching #5 in the weekend box office on its opening weekend. [5]

Free BirdsFree Birds Official Trailer
Free Birds, directed by Jimmy Hayward and excellently premiering in the month of November, is a buddy comedy about a pair of turkeys who want nothing to do with each other, but must team up in order to change history and remove turkeys from the holiday menu. [6]

Free Birds is currently in its fourth week, having opened on 1 November.  It has already grossed over $42 million out of its $55 million budget, and has remained in the Top 5 weekend box office for all three weekends. [7]

 

Financial Information for Relativity Media is unavailable, as it is not a publicly traded company.

 

The Shift:

Relativity Media has largely focused on financial backing of projects created by other groups or studios, but that is changing.  The company spent months exchanging one financial backer for a full consortium of investors, and with the closure of this shift, the company is ramping up production on a large variety of coming projects as it becomes a full-fledged studio capable of releasing 10 to 15 movies per year. [8]

Among the upcoming projects is the adaptation of the memoir Not Without Hope, which will be financed, produced, and distributed by Relativity Media.  Dwayne Johnson is planned to star in the film, which is based on a story of four friends who were tragically stranded at sea, struggling to survive while hoping for help to come. [9]

Another upcoming project, to be released on 6 December, is Out of the Furnace, a gritty drama produced by Scott Cooper, about a blue collar man whose brother is pulled into a crime ring.  When his brother disappears, he takes matters into his own hands to find justice for his brother. [10]

 

Partnership with Major League Gaming:

MLG and Relativity Media have partnered to begin producing original content about professional gamers.  Though professional gaming is somewhat of a niche market, it is expanding, and quite a few people follow it closely, many saying that professional gamers deserve as much respect as professional athletes.  They plan to produce content to better paint a picture of these players and the audiences to non-gamers, hoping that some of these gamers may even eventually become attached to brands in the same way that many athletes today are.  It has been pointed out that both companies target similar demographic audiences, with most of their products targeting men much more than women. [2]

 

Sources:

[1] Geek for E: Relativity Media Logo Accessed on 19 Nov 2013

[2] All Things D: MLG Partners with Relativity Media Accessed on 19 Nov 2013

[3] Relativity Media: Executive Bios Accessed on 20 Nov 2013

[4] Relativity Media: Don Jon  Accessed on 20 Nov 2013

[5] Box Office Mojo: Don Jon Accessed on 20 Nov 2013

[6] Relativity Media: Free Birds Accessed on 20 Nov 2013

[7] Box Office Mojo: Free Birds Accessed on 20 Nov 2013

[8] The Wrap: Robbie Brenner Interview Accessed on 20 Nov 2013

[9] Variety: Dwayne Johnson Accessed on 20 Nov 2013

[10] Relativity Media: Out of the Furnace Accessed on 20 Nov 2013