The departure of Brian Edwards as Relativity Media’s chief operating officer has fueled a fresh round of speculation about financial strain and management woes at Ryan Kavanaugh’s company (Daily Variety, Dec. 9).
But behind all the drama, Relativity is about to conclude its first year as a soup-to-nuts film production-distribution entity with some notable accomplishments, and plans to adjust to new realities for the coming year.
Relativity ranks No. 3 among indies in domestic B.O. for 2011, with $225.4 million and counting. That puts it behind only Summit Entertainment and its “Twilight” juggernaut ($383.9 million), and the Weinstein Co. ($283.6 million, fueled by “The King’s Speech”), and outpacing such established players as Lionsgate.
Relativity was also the only indie to have two No. 1 openers this year, with “Limitless” and “Immortals.”
According to people familiar with Relativity’s financials, each of the pics that the studio oversaw from production through to distribution have either made money or broken even, including “Immortals,” its first tentpole, which has grossed $80 million domestic since opening Stateside on Nov. 11. While not an overwhelming hit, the pic’s performance has exceeded Relativity’s expectations and pushed Tarsem Singh’s 3D sword-and-sandals epic into the black.
(Though Relativity pre-sells international distribution rights, its $105 million international perf thus far has triggered overages that helped it achieve profitability, with more territories to go.)
The first pic Relativity distribbed, “Season of the Witch,” bowed in early January and topped out just short of $25 million domestic.
B.O. aside, there’s no question that the company has endured growing pains in the 18 months since it acquired the distribution assets of Liberty Media’s Overture Films, the deal that put Relativity on the path to mini-major status in enabling it to distribute its own pics.
Edwards’ exit marks the fifth high-level exec to depart Relativity in the past year. And it is no secret in the biz that Relativity’s talks for financing with JP Morgan have come to a halt (Daily Variety, Nov. 11).
Kavanaugh had been courting JP Morgan to replace its primary investor Elliot Management. Elliot, the New York-based hedge fund that helped get Relativity off the ground mostly by backing its co-financing deals with Universal, is looking to cut its ties to Relativity, and that feeling is mutual.
With funding sources in flux, Relativity has not surprisingly been adjusting its its plans for 2012. Part of the reason Edwards left, insiders say, is that Relativity’s scaling-back and Kavanaugh’s hands-on style left him with not enough to do, while things were heating up at the job he left, as COO of Mark Burnett Prods., whose deal with Hearst is expanding significantly.
“I had to follow my heart, which was in being in business with Mark (Burnett),” Edwards told Variety.
Relativity is already on the lookout for a new COO, though with its next release being the in-house production “Haywire” in January, there isn’t immense pressure to find a replacement. Studio insiders say Kavanaugh is making adjustments to be more fiscally responsible and tailor the company’s corporate needs to its upcoming slate.
Relativity has seven releases set for next year, including homegrown productions “Haywire,” “Mirror Mirror,” and “21 and Over”; plus acquisitions including “Act of Valor,” “Raven,” “House at the End of the Street.” Studio has also n untitled Peter Farrelly and Charles Wessler comedy collaboration.