Ryan Kavanaugh’s Relativity Media has absorbed Overture Films’ distribution and marketing operation from Starz LLC, in a move that transforms Relativity into a full-fledged minimajor by adding distribution capabilities to its financing and production business.
No money exchanged hands between Relativity and Starz LLC, according to insiders. Instead, Relativity assumed responsibility for 45 Overture employees, or two-thirds of the company’s staff.
That includes top Overture execs Peter Adee and Kyle Davies. They will remain in their positions, with Adee serving as Relativity’s prexy of marketing, distribution and new media, and Davies as president of theatrical distribution.
The deal marks a key moment in Relativity’s evolution as a player in the film biz. Now Relativity can release its own films instead of going through a third party distrib.
Starz LLC, headed by prexy and CEO Chris Albrecht, retains Overture’s library of less than 20 titles, as well as Starz Media units Anchor Bay Entertainment and two animation units.
Originally, Starz LLC and parent company Liberty Media had wanted to Starz Media as a whole, but when an acceptable bid didn’t materialize, Starz LLC decided to off-load Overture.
Relativity will distribute the three remaining Overture titles, with Starz LLC paying Relativity a distribution fee.
“Jack Goes Boating,” directed by Philip Seymour Hoffman, opens in a limited run on Sept. 17; Matt Reeves’ horror title “Let Me In” opens nationwide Oct. 1; while John Curran’s “Stone,” starring Edward Norton, Milla Jovovich and Robert De Niro opens limited on Dec. 8.
Overture was launched three years ago by veteran film execs Chris McGurk and Danny Rosett, who resigned three weeks ago under pressure from Albrecht as Starz closed in on the deal with Relativity. McGurk and Rosett had hoped to orchestrate a management buyout of Starz Media.
About 20 Overture employees working outside of distribution and marketing will be laid off with severance packages. Three will move over to Starz.
“With our increased focus on original content, it no longer makes strategic sense for Starz to make theatrical motion pictures,” Albrecht said in announcing the Relativity news. “However we’re pleased to have found a great opportunity for the majority of the company’s employees, including the talented distribution and marketing teams.”
Kavanaugh said Adee, a respected marketing exec, and Davies are the perfect team launch the distribution and marketing operation at Relativity.
Among his other previous gigs, Adee ran distribution and marketing under McGurk and Rosett at MGM.
“As we’ve been expanding this area of our business, finding a team with the experience and breadth and depth that Peter and Kyle have couldn’t have been a more perfect fit,” Kavanaugh said. “They have released an incredibly broad slate of films over the past 15 years including some of the highest grossing films in their respective years. I really commend Starz for its smart leadership in helping us make this move.”
Kavanaugh first made his mark in the film biz about five years ago, when he used his Wall Street connections to arrange number of studio slate financing deals with the third-party hedge fund money that was then pouring into the movie biz.
Kavanaugh then began to build up his own financing company, Relativity, into a production entity that has now financed, co-financed or produced more than 200 features.
In late 2008, Kavanaugh acquired genre label Rogue Pictures from Universal, which gave Relativity a library of titles. Relativity has a deal to distribute Rogue titles through U, but because the deal is non-exclusive, those titles can now go through Relativity.
Earlier this month, Relativity and Netflix announced that Relativity-owned pics will be licensed directly to Netflix for web streaming in what would otherwise be the pay TV window for pics through a premium cable outlet a la HBO, Showtime, Starz or Epix. That innovative deal laid important groundwork for Relativity’s move into self-distribution of its pics.
For the time being, Adee and Davies, along with the rest of their team, will remain in Overture’s offices in Beverly Hills. That arrangement will likely change once the final three Overture films are released.