UPDATED: Eric Schmidt has not made an investment in Relativity Media, Variety has learned. Nor does the Alphabet executive chairman intend to back the studio as it emerges from bankruptcy protection — that’s despite media coverage that might have made it appear the former Google CEO was endorsing the embattled entertainment company.
Two weeks ago, Relativity touted an investment from “Eric Schmidt’s TomorrowVentures,” while announcing that Court Coursey, the fund’s managing partner, will become the company’s chief investment and strategy officer. The wording of the release, however, left plenty of room for misinterpretation. Though the press release never stated Schmidt would invest his personal money in the company, many media outlets seized upon Schmidt’s presumed involvement in their headlines and stories. In the meantime, representatives for Schmidt were forced to respond to related legal inquiries about this subject from some of the studio’s debt-holders who are suing Relativity founder Ryan Kavanaugh.
Reached for comment by Variety, Coursey said, “Tomorrow Ventures LLC has a post-bankruptcy financing commitment to Relativity, and we are very excited about the future of the company and are confident in the management team.” A spokesman for Relativity issued a statement: “Relativity never stated that Eric Schmidt, Co-Founder of Tomorrow Ventures LLC, personally invested in the company, but instead accurately stated that Tomorrow Ventures LLC made an investment. Any implication to the contrary is untrue.”
A spokesman for Schmidt declined comment. However, sources familiar with Schmidt’s investment said that none of his assets have been or are committed to be used to back Relativity.
The deal with TomorrowVentures provided a nice public relations bounce for Relativity, come just days after the company announced that Kevin Spacey and his producing partner, Dana Brunetti, would team to run film operations at Kavanaugh’s business. Scores of news outlets that reported the TomorrowVentures commitment featured Schmidt’s name. And some of the stories even implied Schmidt’s personal endorsement of the deal.
The Hollywood Reporter described “the alliance with Schmidt,” saying it “is the second recent vote of confidence in Relativity from a gold-plated industry name.” The New York post (in a story about Schmidt meeting Pope Francis) added that: “Hours earlier, Schmidt agreed to throw the bankrupt Hollywood studio Relativity Media an economic lifeline.” And Screen Daily’s website got even more breathless, headlining: “Alphabet chief invests in Relativity Media,” and reporting: “Kavanaugh’s fundraising nous is legendary but this latest vote of confidence from one of the world’s richest people provides a tremendous boost for the company’s prospects as it seeks to emerge from bankruptcy.”
Earlier this week, Relativity Media received conditional approval to exit bankruptcy. Weighed down by film flops such as “Out of the Furnace” and “Beyond the Lights,” Relativity filed for Chapter 11 protection last summer, citing $1.2 billion in liabilities and assets with a book value of just $560 million. In bankruptcy, the studio has been able to wipe roughly $630 million from its books.
Court documents and testimony revealed that Relativity’s equity financing was far short of the $100 million it hoped to have raised. TomorrowVentures was not named as a studio backer. Much of the $20 million in financing that Relativity told the court it had raised was from investor Joseph Nicholas, who will co-manage the company with founder Ryan Kavanaugh.
As part of its reorganization plan, Kevin Spacey and his producing partner Dana Brunetti will take over as Relativity Studios chairman and president, respectively.