Relativity Media To Lay Off Up To 100 as Bankruptcy Nears

Ryan Kavanaugh Relativity
Michael Buckner/Getty Images

As it approaches an expected bankruptcy filing on Wednesday or Thursday, Relativity Media is preparing to lay off up to 100 of its 350 employees, a source close to the entertainment company said Tuesday.

The job cuts are expected to hit hardest in the company’s digital, fashion and education units, all relatively new operations that are said to be a drag on the bottom line of the operation, which is saddled with $320 million in debt that it is struggling to refinance, said the source, who declined to be named discussing sensitive internal communications.

The number of employees being asked to leave is expected to be close to 90, but could creep slightly higher. Workers at the Beverly Hills-based company are expected to be informed Wednesday about the staff reductions. It’s likely that some of the cuts will hit Relativity’s film production unit. But the more successful Relativity television operation is expected to be spared cuts, as are the film marketing and distribution arms.

Also to be protected from the layoffs: workers who report to the  joint venture between Relativity and EuropaCorp. Under the collaboration, EuropaCorp was expected to pay about $80 million (down from the initially-reported $130 million) to Relativity as part of a joint  distribution and marketing program for the two companies’ respective film slates.

A bankruptcy by the company founded 11 years ago by Ryan Kavanaugh has been anticipated for weeks and several sources said it is likely to come in the next day or two. Kavanaugh, 40, has not spoken publicly about his company in recent days and Relativity has issued no statements about what will come next.

The heavily-leveraged operation has been under distress since May, when it was unable to repay a major loan and had to get an extension from lenders. Kavanaugh’s allies have suggested several times that he was on the verge of deals to help close a reported $320 million gap. But no solution has been forthcoming and employees inside the operation have reported high anxiety and a lack of clear messages from management.

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  1. Michael says:

    Let’s be TRUTHFUL: Do you think Ryan is talented enough to have made ‘Argo’? If so, he wouldn’t be in this mess.

  2. Michael says:

    Hollywood is out of touch with America. I pass by the box office and see the movies lined up and have ZERO INTEREST. Animated films, superhero films, gay films, black films, Sundance films….I have ZERO INTEREST in seeing them. Did you hear me? ZERO INTEREST.

  3. John Knight says:

    Fashion and education units? Really. I’m laughing. WTF

  4. spike says:

    The sequel’s already being planned: The 13 weeks of Benghazi: Hillary’s secret emails

  5. spike says:

    start with laying off Kavanaugh, and attaching all his bank accounts, foreign or domestic

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