Duo renew co-financing partnership to 2015
Even as Wall Street endures another tumultuous week, Relativity Media is promising to keep the hedge-fund coin flowing into Hollywood.Relativity and Universal Pictures have reupped their co-finance partnership through 2015, the companies said Wednesday. Prior to the new deal, Relativity was co-financing 75% of U’s slate through 2011. The new $1.5 billion-plus pact, which calls for Relativity to provide 50% of the coin for 10-15 films per year from 2011-15, comes on the heels of what Relativity CEO Ryan Kavanaugh dubbed a “profitable” summer slate for the studio that included “Mamma Mia!,” “The Mummy: Tomb of the Dragon Emperor” and “Hellboy II: The Golden Army.” As part of the new Universal deal, Relativity is allowed to pick from U’s entire slate, though U retains the right to hold back a portion of the slate. Kavanaugh explained that 25% of U’s pics would likely be deemed too risky for Relativity’s business model. “But we can choose to opt in, too, if a certain element in the project is changed. It’s flexible,” Kavanaugh said. Amid the crisis rocking Wall Street, biz insiders have questioned Relativity’s ability to continue to sink so much cash into slate financing. But a Universal executive close to the deal who spoke on background said the studio is not particularly concerned that market upheavals will affect Relativity. “Relativity is fairly insulated from the current problems in the marketplace because it is largely invested in media companies,” the exec said, noting that Relativity’s Gotham-based hedge-fund backer Elliott Associates has investments that have “been far away from any of the troubled sectors.” In a separate transaction from Wednesday’s U slate deal, Relativity on Monday confirmed that Elliott Associates had invested some $1 billion in Relativity Media (Daily Variety, Sept. 23). That coin will be used toward Relativity’s plans to expand its single-picture business as well as acquire slates, libraries, vidgames and TV and new-media assets. Wednesday’s deal with U essentially extends the terms of the $1.5 billion Beverly 2 slate deal, which was inked in February, by three years. “Our deal has been very profitable to date,” said Kavanaugh, “and the Universal creative, marketing and distribution team is unparalleled. They are true partners.” Universal Pictures exec VP of Michael Joe added: “We have had a genuine collaborative partnership to date, and we look forward to expanding on our ambitions together in the future.” Relativity also has a co-financing slate deal in place with Sony that extends through 2012.