Film unit closes deal to buy horror label
After more than two months of negotiations, Relativity Media has closed a deal to buy Rogue Pictures from Universal Pictures for roughly $150 million.
Move bolsters Relativity’s library, adding some 30 titles, including Rogue’s debut pic “Unleashed” and summer horror hit “The Strangers,” which earned $53 million. Relativity’s new assets also include more than 30 Rogue projects in various stages of development, such as a “Strangers” sequel, which has a finished script. Relativity will inherit a number of producing deals as well, including those with Wes Craven and Intrepid.
A source familiar with the deal dubbed the $150 million sale price a bargain, adding that in a better economy, the consistently profitable genre label could have fetched perhaps more than double that sum. But Universal also comes out of the deal a winner, taking a lump cash payment now and retaining a distribution stake in future Rogue films. As part of the deal, U will continue to release Rogue titles for most of the world and collect a discounted distribution fee of roughly 10%, which is less than the standard rate of 12% but more than the 8% that companies like Marvel and DreamWorks Animation pay.
The first post-sale film set for release is David Goyer’s supernatural thriller “The Unborn,” produced by Michael Bay and his Platinum Dunes shingle. Pic opens Friday.
Relativity now owns three additional Rogue pictures that are expected to bow in 2009, including Craven’s thriller “25/8,” and plans to release a minimum of two Rogue films per year each year thereafter. Relativity prexy of production Tucker Tooley and his team will oversee all future productions.
Rogue has had “success in the horror space in particular, which is something we can expand upon,” said Relativity CEO Ryan Kavanaugh. “This purchase allows us to pair our production and finance abilities alongside Universal’s extraordinary marketing and distribution team, under the umbrella of a strong and highly focused brand.”
Purchase of Rogue comes on the heels of Relativity’s massive equity partnership with Universal — signed in September — whereby Relativity will fund a substantial part of U’s slate through 2015. As part of an earlier deal between the two, Relativity put up 50% of the coin on such recent U pics as “Mamma Mia!,” “Wanted” and “American Gangster.”
Also in September, New York-based hedge fund Elliott Associates pumped $1 billion into Relativity, leaving the production and finance company with more than $2 billion on its balance sheet. Flush with cash, Kavanaugh began looking for bargains and was negotiating with Universal to purchase Rogue by late October.
“Relativity is acquiring a strong, profitable business, and we are pleased to be working with them to continue marketing and distributing Rogue films,” said U exec VP Michael Joe of the label founded in 2004 by David Linde and James Schamus. “We know Ryan and his team will continue to ensure Rogue has an opportunity to flourish.”
Other past Rogue titles include “Waist Deep,” “The Hitcher,” “Balls of Fury” and “Dave Chappelle’s Block Party.”
Though Rogue is only four years old, the label’s development coffers were fairly flush with low-risk horror material. Acquisition should be a boon for Relativity’s single-picture business, which aims to produce eight to 10 films per year but has yet to achieve that pace. Past films produced under Relativity’s one-off biz include “3:10 to Yuma,” “The Bank Job” and “The Forbidden Kingdom.” The upcoming slate includes Jim Sheridan’s “Brothers” and Lasse Hallstrom’s “Dear John,” starring Channing Tatum and Amanda Seyfried.