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 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 producedAcademy Award Winning films such as the Internet biopic The Social Network (2010)and The Fighter(2010).
[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.
[5] Tucker Tooley, President and Chairman of Relativity Media
[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)
[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)
[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].
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.
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
Relativity Media Founder and CEO Ryan Kavanaugh[2*]
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]
Relativity Media President Tucker Tooley[3*]
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
Relativity Media’s IPO preparations[4*]
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]
Kavanaugh Hires New Staff[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]
[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
Focusing on the content creation and distribution of television, film, sports, music, fashion, and digital, Relativity Media was founded in 2004 by CEO Ryan Kavanaugh. (3) Relativity Media seeks to integrate different aspects of its content throughout all of its mediums, providing the best entertainment for its customers. Relativity Media Studios, the largest division of the company, has produced over 200 films such as “Don Jon”, “Out of the Furnace“, “Movie 43“, and “The Pursuit of Happyness“. The company has made more than $17 billion in box office revenue and has earned 60 Oscar nominations. (4)
According to Ryan Kavanaugh, this year Relativity Media plans to make $1 billion in box office revenue, although the company is privately held and there is no official public documentation of revenue. (6) Kavanaugh believes in tight budgets that don’t necessarily need to be hits to make a profit. (7) This strategy is called the “Monte Carlo” approach, which is mainly used on Wall Street. This approach uses information about a possible movie and analyzes whether or not it will make a profit. Considering actors, budget, genre, and release time, Relativity Media is able to figure out which possible movies will be hits, and which ones will be flops. (8) Therefore, the company is able to use small budgets to make small profits, which add up over time to make Relativity Media successful. Currently, Relativity Media is privately held but is planning on going public in the next year once enough equity is raised. (9)
Current Movies:
Relativity Media has released nine films this year, four of which are still in theaters. The films still in theaters are “The November Man”, “Beyond the Lights”, and “The Best of Me”. “Hector and the Search for Happiness”, an action comedy staring Simon Pegg, was released in select theaters during the month of September. (10)
Directed by Peter Chelsom, “Hector and the Search for Happiness” tells the story of a psychiatrist who feels guilty that his patients aren’t getting happier, leading him on a quest to understand the true meaning of happiness. (12) The movie was only released to 183 theaters and made $938,954 in revenue. (13) It garnered negative reviews, receiving only 31% on Rotten Tomatoes.
Directed by Roger Donaldson, and staring Pierce Brosnan, Luke Bracey, and Olga Kurylenko, “The November Man” is an action thriller about a retired spy who must come out of retirement for a personal mission. It is based off the novel “There are No Spies”, by Bill Granger. (15) So far, it has made $32 million dollars globally in box office revenue. It’s budget is disclosed, and came in sixth for its opening weekend in late August, way behind “Guardians of the Galaxy” and “Teenage Mutant Ninja Turtles”. (16) It received negative reviews, with only 34% on Rotten Tomatoes.
Based off the Nicholas Sparks novel, “The Best of Me” is a drama/romance film that tells the story of two high school sweethearts that, after 20 years, are drawn back to their hometown after the death of a friend. They rekindle their high school love, but realize that there are problems after being apart for so long. The movie is directed by Michael Hoffman and stars Michelle Monaghan, James Marsden, and Luke Bracey. (18) Ranked fifth in its opening weekend, “The Best of Me” has made just under $33 million in global box office revenue, $25 million domestically. (19) It also received an underwhelming 10% on Rotten Tomatoes. In late October, B4U, a Bollywood Film and TV company invested $100 million in Relativity Media to make a version of “The Best of Me” for audiences in India. (20)
Relativity Media’s most recent film, “Beyond the Lights” opened on November 14, 2014. Directed by Gina Prince-Bythewood, and staring Gugu Mbatha-Raw, Nate Parker, and Minnie Driver, “Beyond the Lights” tells the story of a young popstar who falls in love with a cop who is striving to become a prominent politician. Fame tests their relationship as they struggle to find peace in the madness that surrounds their lives. (22) The film has made $6.2 million in box office revenue during its opening weekend, and currently has $12 million in total domestic revenue, with a reported budget of $7 million, and received 85% on Rotten Tomatoes. (23)
On August 12, 2014, Relativity Media hired Matt Alvarez as EVP of Production and President of Relativity Studio’s newly formed multicultural division. Alvarez produced hits such as “Ride Along”, the “Barbershop” franchise, and Relativity’s recent movie, “Beyond the Lights”. He will focus on growing the studio’s slate with more diverse filmmakers. (24)
Recent News:
On October 2nd, Relativity Media announced that One West Bank Group and Dune Capital Management is set to purchase Elliot Management’s stake in Relativity Media, along with Ryan Kavanaugh himself. The purchase is led by Ryan Kavanaugh, One West Bank Group and Dune Capital Management’s founder, Steven Mnuchin, along with some other unnamed private investors. (25) This investment shift may hint at secret preparations for Relativity’s IPO release in the next year. Kavanaugh will still be the largest individual shareholder of the company and no specific financials were released. (26) Steven Mnucin is no stranger to Hollywood. He is known for helping to finance “Gravity” and “Avatar”.
On November 4th, Relativity acquired the rights to distribute “Lazarus”, a horror film, in the U.S. This movie comes from Jason Blum’s production company, Blumhouse, and is set to be released on February 20th, 2015. The movie stars Mark Duplass, Olivia Wilde, Evan Peters, and Donald Glover. Blumhouse is known for box office hits such as the “Paranormal Activity” franchise as well as recent success, “Ouija”. “Lazarus” is about a group of medical students who discover a way to bring dead patients back to life. (28)
Based on the best selling memoir by Nick Schuyler, “Not Without Hope” tells the true story of four NFL players who go on a fishing trip in the Gulf of Mexico that turns deadly when the ship capsizes, forcing the friends to cling to the the capsized boat while a storm rages around them. (30) This gruesome tale of friendship will star Dwayne Johnson and has recently begun script adaptation by Nicholas Mariani. (31)
“Demon House”
Lee Daniels, Director. Photo courtesy of thereelnetwork.net (32)
Directed by Lee Daniels, this movie will tell the story of Latoya Ammons and her family, whom have been possessed by demonic spirits for the past two years. Turn Left Productions, with owners Jackson Nguyen and Todd Crites will finance, produce, and distribute the film along with Relativity Media and producer Bruce Cohen. (33) This will be an interesting change for Lee Daniels, known for “The Butler”, who is now taking a turn at making a thriller.
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 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 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 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]
![[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.](https://bejone03.expressions.syr.edu/trf235/files/2015/04/Social-Network-Movie-Poster.jpg)
![[6] Robbie Brenner, President of Production of Relativity Studios](https://bejone03.expressions.syr.edu/trf235/files/2015/04/Robbie-Brenner.jpg)
